Question
2) A monopolistic manufacturer of high-end leather goods sells a particular type of leather handbag through company-owned stores. The company operates two different types of
2) A monopolistic manufacturer of high-end leather goods sells a particular type of leather handbag through company-owned stores. The company operates two different types of stores. Type 1 stores are located in upscale shopping malls and are visited by consumers who highly value the company's brand name. The demand curve for handbags sold through these types of stores is given by Q1 = 5000 - 4 P1, where P1 is the price in $ per handbag and Q1 is the number of handbags sold per quarter. The identical handbag is also sold through Type 2 stores that are located in factory-outlet malls. These stores are visited by consumers who, on average, are more price-sensitive than those who visit the Type 1 stores. The demand curve for handbags sold through these types of stores is given by Q2 = 4000 -16 P2, where P2 is the price in $ per handbag and Q2 is the number of handbags sold per quarter. The marginal cost is $200 per handbag for both types of stores.
c) You have been informed that due to a disruption in production, there are only 2200 handbags available for sale for that quarter. Given that there are only 2200 handbags available, what is the profit-maximizing quantity of handbags sold in each type? Q1 = ______________ Q2 = ______________ Short explanation of how you reached your answer:
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