An umbrella manufacturer sells its product in Nevada and Oregon. Due to different climates, each state has
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Question:
An umbrella manufacturer sells its product in Nevada and Oregon. Due to different climates, each state has different demands for umbrellas. The marginal cost of production is the same in each state and is a constant $10. The demand curve for raincoats in each state is: QOregon= 140 - 2P (or P = 70 - 0.5QOregon) QNevada= 80 - 5P (or P = 16 -0.20QNevada)
The umbrella manufacturer wants to practice third-degree price discrimination. How much should it charge in each state? (Assume that resale between the states is not possible.)
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