Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Suppose that Audi can produce any quantity of cars at a constant marginal cost equal to $15,000 and a fixed cost of $20 million. You
Suppose that Audi can produce any quantity of cars at a constant marginal cost equal to $15,000 and a fixed cost of $20 million. You are asked to advise the CEO as to what prices and quantities Audi should set for sales in Europe and in the U.S. The demand for Audis in each market is given by: QE = 18,000 - 400 PE and QU = 5500 - 100PU where the subscript E denotes Europe, the subscript U denotes the United States, and all prices and costs are in thousands of dollars. Assume that Audi can restrict U.S. sales to authorized Audi dealers only. Group of answer choices With separate markets, Audi produces 6,500 cars in Europe and 2,500 cars in the USA. With separate markets, Audi produces 2,000 cars in Europe and 6,000 cars in the USA. With separate markets, Audi produces 6,000 cars in Europe and 2,000 cars in the USA
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started