Two pesticide manufacturers offer broad-spectrum products to farmers. Brandex's chemical sells for 2.50$/liter and eliminates harmful insects
Question:
Two pesticide manufacturers offer broad-spectrum products to farmers. Brandex's chemical sells for 2.50$/liter and eliminates harmful insects with an application of .6 liters/acre. Thanatos's product sells its product for 1.00$/liter and also eliminates harmful insects when applied at .9 liters/acre. Wheat farmers account for 60% of planted acres; it takes wheat farmers .3 liters of fuel to lay down a liter of pesticide. Corn farmers account for 40% of planted acres, and it takes them .1 liter of fuel per liter of pesticide sprayed. Fuel costs 8.00$/liter.
1. What percentage of planted acres should be sprayed with Brandex?
2. What level of fuel liters needed per liter of pesticide would make a farmer indifferent between the two products?
3. If Brandex's cost of producing enough pesticide to cover an acre is $.12 more than Thanatos's, and the two firms engage in tough, open price competition for corn farmers' business, who will win the market and how much profit will they capture per sprayed acre?
Fundamentals Of Management
ISBN: 9781292307329
11th Global Edition
Authors: Stephen P. Robbins, Mary A. Coulter, David A. De Cenzo