Please do fast ASAP Sonia Music Entertainment (SME) is an American company that holds copyrights ofpopular songs. Consider a supply chain where SME sells songs to iTones at price$w. which in turn sells songs to customers at price $p. The demand for the song isnot random, but is sensitive to price, given by Dlp) 240-120p. Consider twoscenarios as follows:(1) SME and iTones sign on a wholesale price contract, where the two firms makeisolated decisions; that is, SME first determines $w to maximize its own profit andthen iTunes sets $p to maximize its own profit. The total supply chain profit, i.e.,the sum of the profits for SME and iTunes, is $X.(i) SME and iTones merge into a single firm. The profit of the integrated firm is $Y.What is Y - X?O 10O 15O 25O 4530o o

Marginal cost of itone is = w Marginal cost of SME = 0

Sonia Music Entertainment (SME) is an American company that holds copyrights of popular songs. Consider a supply chain where SME sells songs to iTones at price $w, which in turn sells songs to customers at price Sp. The demand for the song is not random, but is sensitive to price, given by D(p) = 240-120p. Consider two scenarios as follows: () SME and iTones sign on a wholesale price contract, where the two firms make isolated decisions; that is, SME first determines $w to maximize its own profit and then iTunes sets $p to maximize its own profit. The total supply chain profit, i.e., the sum of the profits for SME and iTunes, is $X. (ii) SME and iTones merge into a single firm. The profit of the integrated firm is $Y. What is Y- X? O 10 15 O 25 O 45 O 30

Sonia Music Entertainment (SME) is an American company that holds copyrights of popular songs. Consider a supply chain where SME sells songs to iTones at price $w, which in turn sells songs to customers at price Sp. The demand for the song is not random, but is sensitive to price, given by D(p) = 240-120p. Consider two scenarios as follows: () SME and iTones sign on a wholesale price contract, where the two firms make isolated decisions; that is, SME first determines $w to maximize its own profit and then iTunes sets $p to maximize its own profit. The total supply chain profit, i.e., the sum of the profits for SME and iTunes, is $X. (ii) SME and iTones merge into a single firm. The profit of the integrated firm is $Y. What is Y- X? O 10 15 O 25 O 45 O 30

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

Chapter12: Price And Output Determination: Oligopoly

Section: Chapter Questions

Problem 1E

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