In 2011, the Cornucopia Products Company (CPC) realized $100,000 in pr

Question

In 2011, the Cornucopia Products Company (CPC) realized $100,000 in profits. Their 2011 customer base of 20,000 is relatively stable. Based on past trends, they can expect to retain that customer base in 2012. If they make no additional changes in marketing or R & D, then it is reasonable to expect their customer base in 2012 will be remain the same. Increasing their profits will depend on generating new customers either through successful advertising campaigns and or attractive fruits of research & development. The total customer base C in 2012 will be the retained customers plus any new customers. If C is their 2012 customer base in thousands, then their profit P (in thousands of dollars) is given by

P = 0.01C^2 + 7C – 44

P = 0.01C^2 + 7C – 44In 2012, CPC can choose to invest some part of its 2011 profits in one or more forms of advertising. In everything on this card, X = money (in thousands of dollars) invested in that form of advertising, and N is the number of new customers (in thousands), on average, that form of advertising is likely to generate in 2012.

1) Print Media
Investment: no more than $10,000, due to sharply diminishing returns above that threshold.
If X < 10, N = X/2

2) TV & Movie advertising
Investment: minimum of $15,000
If X > 15, N = 2X/3 – 10

3) Web-based advertising
Investment: no lower or upper limit
N = X/4In CPC's Research and Development (R & D), many new products have been developed in the past, contributing to its financial success. In 2012, CPC has already allocated a small baseline budget to ongoing R & D, without any expectation that those results will bear fruit in this calendar year. Beyond that, CPC has to decide about whether to put more money from its 2011 profits into two ongoing projects.

Project A has been in development for a little over a year. It is close to completion. The most reliable data about Project A suggest if CPC makes a $10000 investment in 2011, there's an 80% chance of producing a new product that would add 5,000 new customers in 2012; if CPC makes a $30,000 investment, there's a 20% chance of producing a suite of new products that would add 30,000 new customers.

Project B is a relatively new product, involving some cutting edge technology. It's very expensive, and the results are uncertain. The most reliable data about Project B suggest if CPC makes a $40000 investment in 2011, there's a 40% chance that the new products would add 50,000 new customers in 2012.

Gemmie · Answer

\frac{2x}{3} - 10 = \frac{x}{4}

\frac{2x}{3} - \frac{x}{4} = 10

\frac{8x}{12} - \frac{3x}{12} = 10

\frac{5x}{12} = 10

x = 24

Bismuth83 · Answer

1. The question asks us to  find what investment (how much money) it would take for TV & movie advertising and Web-based advertising to gain the same amount of new customers .

2. In Card #2, we are given two equations with N and X, where they represent the number of new customers and the investment, respectively.

- TV & movie advertising:  N = \frac{2X}{3} - 10 .

- Web-based advertising:  N = \frac{X}{4} .

3. The same amount of new customers means that N is equal for both equations. So,  \frac{2X}{3} - 10 = N = \frac{X}{4} \rightarrow 8X - 120 = 3X \rightarrow 5X = 120 \rightarrow X = 24 .

4. Since all of the measurements are done in the thousands, the actual investment would be   $24,000  .

napolean92728 · Answer

Can anyone explain how would you go about any MSR question.... Like do you first read the question and then move towards the passage or do you first read the passage and then move towards the question...

bdc · Answer

Yes, I do have the same question, should we read the question at the start and go to the passage or vice-versa?
Thanks in Advance...

CapedCrusader09 · Answer

Idk about others, but my approach depends on how "long" and "comprehensible" either the question or the sources are. In this case, for instance, I read the question first, understood what data was to be needed to solve the question, and quickly paced back and forth between the cards to check out which of them was most likely to help me solve the problem. Turned out to be Card #2. Voila! It mostly boils down to question's requirement of information.

napolean92728

Can anyone explain how would you go about any MSR question.... Like do you first read the question and then move towards the passage or do you first read the passage and then move towards the question...

	$16,000
	$18,000
	$24,000
	$36,000
	$48,000

In 2011, the Cornucopia Products Company (CPC) realized $100,000 in pr

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In 2011, the Cornucopia Products Company (CPC) realized $100,000 in pr

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards