Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

9) Suppose that BMW can produce any quantity of cars at a constant marginal cost equal to $20,000 and a fixed cost of $10 billion.

image text in transcribed
9) Suppose that BMW can produce any quantity of cars at a constant marginal cost equal to $20,000 and a fixed cost of $10 billion. You are asked to advise the CEO as to what prices and quantities BMW should set for sales in Europe and in the United States. The demand for BMWs in Europe market is: QE = 4,000,000 - 100 PE The demand for BMWs in the US market is: Qu = 1, 000, 000 - 20 PE Assume that BMW can restrict U.S. sales to authorized BMW dealers only. a) What quantity of BMWs should the firm sell in each market, and what should the price be in each market? What should the total profit be? b) If BMW were forced to charge the same price in each market, what would be the quantity sold in each market, the equilibrium price, and the company's profit

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essays In Our Changing Order

Authors: Thorstein Veblen

1st Edition

1351311425, 9781351311427

More Books

Students also viewed these Economics questions

Question

What is the method of least squares?

Answered: 1 week ago

Question

The relevance of the information to the interpreter

Answered: 1 week ago

Question

The background knowledge of the interpreter

Answered: 1 week ago