New Exercise Bank Content Qu$.01-08$

Reconsider the example of choosing the advertising budget for the VRX$2000$ that is presented in Section $1\mathrm{.}4.$ There it was determined

that the optimal level of advertising spending was $$135,392$ leading to a profit of $$77,425.$ Now suppose that the component prices for

the VR$\backslash$times $2000$ have been fluctuating. The variable cost for producing the VR $2000$ has now increased from $$295$ to $$300.$ Due to the

competitive marketplace, VRX feels they cannot pass these costs on to the consumer, so the company plans to keep the selling price

of the VR $2000$ at $$375.$

Re$-$solve the optimization model for the VR$\backslash$times $2000$ considering the new variable cost.

a$.$ What impact did the increased variable cost have $($if any$)$ on the best level of advertising?

Suppose instead that the variable cost for the VRX$2000$ decreases to $$290.$ Re$-$solve the optimization model.

b$.$ What impact did the decreased variable cost have $($if any$)$ on the best level of advertising?

Complete this question by entering your answers in the tabs below.

What impact did the increased variable cost have $($if any$)$ on the best level of advertising?

Note: Do not round intermediate calculations and round up the final answers to the next whole number.

Advertising budget

Total profit