Question:
Radhika Priya Dasiopened a boutique along with four
workers. No problem of any type was faced in
opening the boutique. At her boutique special dresses
made for marriages and parties are sold. Despite there
being a lot of competition in the market, the boutique
was earning a good profit.Since all the profit went into
her pocket, Radhika Priya Dasi was getting inspired to
work with great efficiency. With the increase in
workload, the number of workers was increased from
4 to 6 by her. All of them were happy since the
business was running successfully. Unfortunately,
one day the boutique caught fire due to a short circuit.
Consequently, Radhika Priya Dasi had to suffer a
heavy loss. The circumstances deteriorated so much
that she had to dispose off her personal properties to
repay the boutique's debts. In order to revive the
boutique, she approached a bank which did not
extend a long-term loan to her.
(a) Identify the form of business organisation
discussed in the above para.
(b) Explain any three merits of the form of business
organisation identified in (a) by quoting the lines from
the above para.
(c) Also explain any two limitations of the form of
business organisation identified in (a) by quoting the
lines from the above para.
Answers
Explanation:
Management of AG Travel and Tour has identified two groups of individuals that
would be interested in the vacation package consisting of room and board and/or
entertainment. The maximum amount that group 1 is willing to pay for room and
board is GHC 2500 and for entertainment is GHC 500. For group 2, the maximum
amount they are willing to pay for room and board is GHC 1800 and for
entertainment is GHC 750. Although AG Travel and Tour is not able to identify
members of either group, it does know that each group values the components of
the package differently. Assuming there are an equal number of members in each
group and that the total membership in each group is a single individual. If the
marginal cost of providing the service (room and board and/or entertainment) to
each group is GHC 1000.
i. How much will the hotel charge members of each group for the vacation
package if it could identify the members in each group? (5 marks)
ii. How much will the profit for AG Travel and Tour be? (2 marks)
iii. Since AG Travel and Tour is not able to identify members of each group,
what price should it charge for each product? (3 marks)
iv. What will be the profit for AG Travel and Tour in the case of (iii) above?
(3 marks)
v. If AG Travel and Tour wants to charge a package price, what is the highest
price it can charge? (4 marks)
vi. What profit will AG Travel and Tour make if it charges the package price
found in (v) above?