Chapter 11, Problem 11.2P

Suppose that BMW can produce any quantity of cars at a constant marginal cost equal to $20,00 and a fixed cost of $10 billion. You are asked to advise the CEO as to what prices and quantities BMW should set for sales in Europe and in the United States. The demand for BMWs in each market is given by   QE=4,000,000−100PE and QU=1,500,000−20PU   where the subscript E denotes​ Europe, the subscript U denotes the United States. Assume that BMW can restrict U.S. sales to authorized BMW dealers only.     a.  What quantity of BMWs should the firm sell in each​ market, and what should the price be in each​ market? What should the total profit​ be? ​ (round dollar amounts to the nearest penny and quantities to the nearest​ integer) In Europe equilibrium quantity is 1,000,000 cars at an equilibrium price of $30,000 In United States equilibrium quantity is 550,000 cars at an equilibrium price of $47,500 BMW makes a total profit of $15.125 billion.  I Need help with this part: If BMW were forced…

Suppose that BMW can produce any quantity of cars at a constant marginal cost equal to $20,00 and a fixed cost of $10 billion. You are asked to advise the CEO as to what prices and quantities BMW should set for sales in Europe and in the United States. The demand for BMWs in each market is given by   QE=4,000,000−100PE and QU=1,500,000−20PU   where the subscript E denotes​ Europe, the subscript U denotes the United States. Assume that BMW can restrict U.S. sales to authorized BMW dealers only.     a.  What quantity of BMWs should the firm sell in each​ market, and what should the price be in each​ market? What should the total profit​ be? ​ (round dollar amounts to the nearest penny and quantities to the nearest​ integer) In Europe equilibrium quantity is 1,000,000 cars at an equilibrium price of $30,000 In United States equilibrium quantity is 550,000 cars at an equilibrium price of $47,500 BMW makes a total profit of $15.125 billion.  I Need help with this part: If BMW were forced…

Exercise 4.6 An econometrician hired to analyse a local golf course has determined that there are two types of golfers, the regular and the occasional. The annual demand for games from regular players is given by QH = 24 – 0.3P, where P is the price of a round of golf. On the other hand, the annual demand for occasional items is given by QO = 10 – 0.1P. The marginal cost and the average total cost per item are equal to €20.   a) If you could distinguish between regular and casual players, what price would be set for each type? How many games would each type of player play? How much profit could the golf course generate? Represent graphically. b) As an alternative to the discrimination of third degree prices, those in charge consider a double tranche rate according to which the members can play as many games as they wish at a price of € 20 per game.  How much profit will the golf course generate if it charges all players the same annual fee for becoming a member of the club? What if you…