Phillips Industries manufactures a certain product that can be sold directly to retail outlets or to the Superior Company for further processing and eventual sale as a completely different product. The demand function for each of these markets is Retail Outlets: P1= 120-Q1 Superior Company: P2= 40-Q2 Where P1 and P2 are the prices charged and Q1 and Q2 are the quantities sold in the respective markets. Phillips' total cost function for the manufacture of this peroduct is TC=10=8(Q1=Q2) What is Phillips' total profit function? The profit-maximizing levels of price and output for the retail outlets market are $ per unit and units respectively. The profit-maximizing levels of price and output for the Superior company are $ per unit and units respectively. At these levels of output, the marginal revenue in the retail outlets market is $ and the marginal revenue in the Superior Company market is $ . What are the total profits if Phillips is effectively able to charge different prices in the two markets? $ . If Phillips is required by law to charge the same per unit in each market, the profit-maximizing level of price and output are $ per unit and units, respectively. Total profits in this condition are $

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter14: Pricing Techniques And Analysis

Section: Chapter Questions

Problem 5E

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Phillips Industries manufactures a certain product that can be sold directly to retail outlets or to the Superior Company for further processing and eventual sale as a completely different product. The demand function for each of these markets is

Retail Outlets: P1= 120-Q1 Superior Company: P2= 40-Q2

Where P1 and P2 are the prices charged and Q1 and Q2 are the quantities sold in the respective markets. Phillips' total cost function for the manufacture of this peroduct is TC=10=8(Q1=Q2)

What is Phillips' total profit function?

The profit-maximizing levels of price and output for the retail outlets market are $ per unit and units respectively.

The profit-maximizing levels of price and output for the Superior company are $ per unit and units respectively.

At these levels of output, the marginal revenue in the retail outlets market is $ and the marginal revenue in the Superior Company market is $ .

What are the total profits if Phillips is effectively able to charge different prices in the two markets? $ .

If Phillips is required by law to charge the same per unit in each market, the profit-maximizing level of price and output are $ per unit and units, respectively. Total profits in this condition are $ .

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