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You are the marketing manager of a firm that produces titanium and sells this metal to two distinct kinds of customers: aircraft producers and golf
You are the marketing manager of a firm that produces titanium and sells this metal to two distinct kinds of customers: aircraft producers and golf club manufacturers. Demand for titanium by these two market segments is quite different, as described by the respective price equations: PA= 10 - 0.002QAand PG= 12 - 0.01QG, where annual quantities [QAand QG] are in thousands of pounds and prices [PAand PG] are in dollars. Your firm estimates the marginal cost of titanium production at $4 per pound.
- For each segment, determine the firm's profit-maximizing price and output. Is the firm practicing price discrimination?(10 points)
- Because of titanium shortages, the firm's total production capacity drops to only 1.5 million pounds per year. Determine the firm's optimal quantities and prices in this case.(10 points)
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