Company Yokurt plans to roll out a new premium yoghurt brand Yo in Germany and Poland. Based on a market research study conducted in both countries, the firm found that the demand schedules in the 2 countries for Yo would be:

Poland : Q = 100 − 10 P and Germany : Q = 150 − 5P where Q is the sales in units and P (in euros) is the price

a. What would be the optimal price (i.e., profit maximizing; you can assume zero costs) for Poland? Germany? (Show all your calculations.)

b. Suppose parallel importers target dairy products for which the price gap is more than €2. Applying the “pricing corridor”
principles, what price would you set for YO in Poland? In Germany? Explain your decisions (e.g., you could sketch the pricing corridor for this example as was done in class—hint: use increments of €2).

c. What could be the worst case scenario? Show how YO's profits would drop under such a scenario (calculate the profits for the “optimal,” “pricing corridor,” and “worst case scenario”).