American Eaglet sells surfing equipment in Los Angeles (LA) and Honolulu (Hon). The demand functions for each of these two groups are QLA = 600 – 2.5PLA QHon = 800 – 4.0PHon where Q is the number sold and P is the price of the equipment. The cost of providing Q units of the equipment is given by
a. What is the profit-maximizing quantity for the Honolulu market? C=10,000+50Q whereQ=QHon +QLA.
b. What is the profit-maximizing price for the Honolulu market?
c. Based on the facts above, briefly explain whether the profit-maximizing price in Los Angeles would be the same or different than the price in Honolulu (no additional calculations are necessary).