. A television station is considering the sale of promotional DVDs. It can have the DVD's produced by one of two suppliers. Supplier A will charge the station a set-up fee of $1,200 plus $2 for each DVDs; supplier B has no set-up fee and will charge $4 per DVD. The station estimates its demand for the DVDs to be given by Q=$1,600-200P, where P is the price in dollars and Q is the number of DVDs. (The price equation is P=8-Q/200.)

A Suppose the station plans to give away the videos. How many DVDs should it order? From which supplier?

B Suppose instead that the station seeks to maximize its profit from sales of the DVDs. What price should it charge? How many DVDs should it order from which supplier? (Hint: Solve two separate problems, one with supplier A and one with supplier B, and then compare profits. In each case, apply the MR=MC rule.)