ABC Company manufactures vacuum cleaner with a brand name 'Cool. The company made good profits during...

 

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ABC Company manufactures vacuum cleaner with a brand name 'Cool. The company made good profits during initial 10 years; however, the profits declined due to competition from national brands. In 2020, The Research and Development team came out with an innovative product, named 'Super Cool which runs at very low voltage and consumes less energy. The company is currently supplying its products in geographically segmented markets of retail and commercial market and charging the same price in both markets. However, the Chief Economist of the company informed that the price elasticity is 2 in retail and 4 in commercial market. Given the cost function is TC = 50 + 20Q; the demand for retail market is P1 = 180-8Q1; the demand for commercial market is P2 = 100 company's total demand is given by P = 240 - 4Q. 4Q2 and the - a. Is it possible for the company to charge two different prices in retail and commercial markets? Explain your answers. (4 Marks) b. What is the profit for the company if they charge two different prices in both markets? Show the calculations. (10 Marks) e. What is the total profit if the company impose uniform pricing? (6 Marks) ABC Company manufactures vacuum cleaner with a brand name 'Cool. The company made good profits during initial 10 years; however, the profits declined due to competition from national brands. In 2020, The Research and Development team came out with an innovative product, named 'Super Cool which runs at very low voltage and consumes less energy. The company is currently supplying its products in geographically segmented markets of retail and commercial market and charging the same price in both markets. However, the Chief Economist of the company informed that the price elasticity is 2 in retail and 4 in commercial market. Given the cost function is TC = 50 + 20Q; the demand for retail market is P1 = 180-8Q1; the demand for commercial market is P2 = 100 company's total demand is given by P = 240 - 4Q. 4Q2 and the - a. Is it possible for the company to charge two different prices in retail and commercial markets? Explain your answers. (4 Marks) b. What is the profit for the company if they charge two different prices in both markets? Show the calculations. (10 Marks) e. What is the total profit if the company impose uniform pricing? (6 Marks)

Answer rating: 100% (QA)

a No the company cannot charge two different prices in retail and c... View the full answer