1. Coach Industries Inc. is a leading manufacturer of recreational vehicle products. Its products include travel trailers, fifth – wheel trailers (towed behind pick – up trucks), and van campers as well as parts and accessories. Coach offers it fifth – wheel trailers to both dealers (wholesale), and retail customers. Ernie Pantusso, Coach’s controller, estimates that each fifth wheel trailer costs the company $10,000 in labor and materials. Inverse demand functions for fifth wheelers are: PW = $15,000 – $5QW (Wholesale) PR = $50,000 – $20QR (Retail)
Part a Assuming that the company can discriminate between its two types of customers, calculate the profit – maximizing price, output and profit
2. The inverse demand function for gum produced by a firm with market power is given by
P = $0.20 – $0.04Q and the marginal cost is zero.
Part a
Compute the number of sticks of gum to include in each pack
Part b
Compute the price of each pack of gum