... They also spend £40,000 (V) per period on advertising and are capable of producing up to 1,000 units in each period. The total cost function is expressed as; TC = d + eQ + fQ + V The demand function is as follows; P = a - bQ + c?V Where a = 4,000, b = 3 and c = 3 This report is therefore prepared for top management, as the company has requested that we assist in evaluating the following potential strategies, using their current profit potential as your benchmark; 1. Lowering price by 10%, and a drawn excel diagram to illustrate the solution 2. Doubling the advertising budget, and a drawn excel diagram to illustrate the solution 3. Any other strategies of our own that you may like to suggest, and a drawn excel diagram to illustrate the solution Report Overview 2. Evaluation of Potential Strategies 2.1 Price Reduction by 10% Clean Air Ltd. ...

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