Question

In the Sales Mix Selection decision when demand is unlimited and products use the same inputs, what factors become crucial in determining the optimal mix?

Answer 1

The factors crucial for determining the optimal sales mix selection with unlimited demand and products using the same inputs include cost of production, market power, product differentiation, and barriers to entry.

Step-by-step explanation:

When making a Sales Mix Selection decision with unlimited demand and products using the same inputs, there are several factors that become crucial in determining the optimal mix:

1. Cost of Production: The costs associated with producing each product will impact the profitability of the mix. Lower production costs can lead to higher profits.
2. Market Power: The market power of each firm in the industry affects the ability to set prices and gain a larger share of the market.
3. Product Differentiation: The similarity of each firm's product to the products of other firms in the industry can impact the demand and market share of each product.
4. Barriers to Entry: The difficulty for new firms to enter the industry can affect market competition and the optimal mix selection.