Question
Kim Salt Company sells table salt to both retail grocery chains and commercial users (e.g., bakeries, snack food makers, etc.). The demand function for each
Kim Salt Company sells table salt to both retail grocery chains and commercial users (e.g., bakeries, snack food makers, etc.). The demand function for each of these markets is:
Retail grocery chains: P1 = 180 - 8Q1, Commercial users: P2 = 100 - 4Q2
where P1 and P2 are the prices charged and Q1 and Q2 are the quantities sold in the respective markets. The total cost function for Kim Salt Company is: TC = 50 + 20 (Q1 + Q2)
A.
B. b )
C.
Determine the total profit function of Kim Salt Company.
(Assuming that Kim Salt Company is effectively able to charge different prices in the two markets, what are the profit-maximizing price and output levels for the product in the two markets? What is the total profit of Kim Salt Company under this condition?
Assuming that Kim Salt Company is required to charge the same price in each market, what are the profit-maximizing price and output levels? What is the total profit of Kim Salt Company under this condition?
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