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Automotive Manufacturing Corp. faces the following demand function for its cars: P = 55,000 - 200Q The marginal cost (MC) to manufacture a car is
Automotive Manufacturing Corp. faces the following demand function for its cars:
P = 55,000 - 200Q
The marginal cost (MC) to manufacture a car is $9,000.
- What will the price be if Automotive Manufacturing Corp. decides to sell the cars by itself?
- What will the price be if Automotive Manufacturing Corp. sells its cars through Automotive Distribution LLC, an independent distributor? Note that when Automotive Manufacturing Corp. contracts with Automotive Distribution LLC, both companies face the same demand curve.
- Should Automotive Manufacturing Corp. sell the cars by itself or sell them through Automotive Distribution LLC? Why?
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Essentials Of Economics
Authors: Bradley Schiller
7th Edition
0073375802, 9780073375809
