Suppose a food company has both food and store divisions. The food division produces burgers that are sold downstream at the store. Assume that the store sells 1,000 burgers at $10, 2,000 burgers at $9, 3,000 at $8, and so on up to 10,000 burgers at $1. The price the food division charges for a burger is $3.50. What will be the profit-maximizing price for the entire company? How much profit will the company make? What is the revenue-maximizing quantity for the store?
Suppose a food company has both food and store divisions. The food division produces burgers that are sold downstream at the store. Assume that the store sells 1,000 burgers at $10, 2,000 burgers at $9, 3,000 at $8, and so on up to 10,000 burgers at $1. The price the food division charges for a burger is $3.50. What will be the profit-maximizing price for the entire company? How much profit will the company make? What is the revenue-maximizing quantity for the store?
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter22: Getting Divisions To Work In The Firm’s Best Interests
Section: Chapter Questions
Problem 22.1IP
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Suppose a food company has both food and store divisions. The food division
produces burgers that are sold downstream at the store. Assume that the store
sells 1,000 burgers at $10, 2,000 burgers at $9, 3,000 at $8, and so on up to
10,000 burgers at $1. The price the food division charges for a burger is
$3.50. What will be the profit-maximizing price for the entire company? How much
profit will the company make? What is the revenue-maximizing quantity for the
store?
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