Question
A fancy bakery in Sao Paolo sells Baguettes to restaurants and individuals. The weekly demand from individuals is given by: Q i = 8000 -
A fancy bakery in Sao Paolo sells Baguettes to restaurants and individuals.
The weekly demand from individuals is given by: Qi = 8000 - 200P
The weekly demand from restaurants is given by: Qr = 6000 - 300P
...where P is in Brazilian Real. The marginal cost of a baguette is 2.0 Brazilian Real.
1a: Determine the demand equation for the total of both segments, Qt.
1b: Calculate the profit maximizing price for the bakery when they charge their best uniform price to the combined market.
1c: Determine the respective price elasticities for each segment at the price you computed in part b.
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Managerial Economics
Authors: Luke M. Froeb, Brian T. McCann, Michael R. Ward
5th Edition
1337106666, 978-1337106665
