Demand Function, Marginal Cost

Dec 2nd, 2014
Anonymous
Category:
Accounting
Price: $5 USD

Question description

Great Cars, Inc. faces the following demand function for its automobiles: P=55,000 - 200Q Its marginal cost (MC) is $9,000. What will its price be if it decides to sell the automobiles by itself and what will the price be if it sells it through DistiCorp, an independent distributor. Note that when Great Cars, Inc. contracts with DistiCorp, it has to take into account that DistiCorp faces the same demand curve. What is the consequence of this exclusive dealing on prices.

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