Business, 12.08.2020 04:01, 3000517

1)Mr. Henry is a manager of GSC Company just started to run his business with the main production selling movie tickets where the price for each ticket=RM10. Below table shows the production of GSC Company for August: LaborQuantity (pieces)Total Cost

11095

225170

335225

450265

570320

675370

775465

870565

As a seller, Mr. Henry wants to ensure that he has enough workers to produce his product efficiently. By just looking at the increasing number of production quantity at each level of labor used, Mr. Henry assumes that the production will be more productive if he could add more labor into the production. However, one of his workers who just graduated from the university has advised him to do some calculation which is related to the concept of ‘Law of Diminishing Marginal Return’ to avoid him from taking action that will only waste his money.

As an oligopoly company, Mr. Henry realizes that he should have strategies to maintain his competitiveness in the industry. He needs to know the point where he can maximize his profit in the production of his movie tickets. Apart from other strategies used, he is also considering practicing price discrimination in selling his products to attract customers.

Based on this situation, do you agree or disagree on what had suggested by Mr. Henry’s worker regarding the use of the ‘Law of Diminishing Marginal’ concept? Why? How many units Mr. Henry needs to produce to maximize his profit (you are required to use the MRMC approach)? Show the appropriate calculations to justify your answer.

Explain what you understand about the price discrimination by relating it with the degree of discrimination. What are the conditions that need to be fulfilled to make sure the discrimination in price is successful? Provide examples for your answers in terms of Mr. Henry’s product.

Answers: 2

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1)Mr. Henry is a manager of GSC Company just started to run his business with the main production se...