Suppose only United Motors (UM) builds SUVs.

a. The demand for SUVs in Europe is given by QE = 100 - PE.

If AC = MC = 10, how many SUVs will be sold in Europe? What will be the market price PE of a SUV in Europe? What are the profits UM makes in Europe?

b. The demand for SUVs in the US is given by QUS = 80 - 2PUS.

How many SUVs will be sold in the US? What will be the market price PUS of a SUV? What are the profits in the US?

c. Now suppose, everyone from Europe migrates to the US.

What is the market demand for SUVs faced by UM? Express this total demand algebraically. What will be the single price charged and the total SUVs sold after the migration? What are the profits now? How do these profits compare with total profits before the migration

d. Suppose the Europeans are willing to pay a premium of 10 for bright copper colored SUVs.

Can you think of a pricing strategy that might allow UM to extract more profits even after the migration?