Question: A manufacturer faces a linear price response function d(p)=4000 100p. The unit production cost is $10. The manufacturer can segment the market into two parts

A manufacturer faces a linear price response function d(p)=4000 100p. The unit production cost is $10. The manufacturer can segment the market into two parts by promising different lead times.

(1) If the separating price is $30, what are the optimal prices for the two segments? What is the total profit?

(2) If the separating price is $20, what are the optimal prices for the two segments? What is the total profit?

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