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A manufacturer makes $.20 on a 10-oz. can of soup and $.40 on a 20-oz. can of soup. In either case, the manufacturer makes $.02
A manufacturer makes $.20 on a 10-oz. can of soup and $.40 on a 20-oz. can of soup. In either case, the manufacturer makes $.02 per ounce. But in this case the larger size causes consumers to increase their consumption of soup by 30% so the consumption-adjusted margins per ounce of the 20-oz. saze can be calculated as ($.40 x 1.3) divided by 20 = $.026. Which is more profitable? a. 20 oz can b. 40 oz. can
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