Q9

Suppose you work for a company that makes a product line for a large hardware chain. The chain asks you for a price quote for 30,000 units that will require a $1,500,000 investment with marginal costs of $15 per unit. What is the lowest price you are willing to quote? Suppose after you made your investment you face stiff competition from a competitor, what is the minimum price that you could economically justify after your investment was made?

50, 100

50, 50

65, 115

65, 15

None of the above

Q 10

Problem #9 represents a problem in which:

The manufacturer is required to make a specific investment to satisfy a customer s want, after the investment the manufacturer could be subject to the "hold-up" problem.

The customer is required to make a specific investment in itself, after the investment the customer could be subject to the "hold-up" problem.

The manufacturer is required to make a specific investment in itself to satisfy an internal need, after the investment the manufacturer could be subject to the "hold-up" problem.

None of the above.