QUESTION
Assignment Score: $46.1 \%$ Resources Hint Check Answer Question 2 of $4>$ Pricing Strategies for Firms with Market Power — End of Chapter Problem Kip's Auto Detailing has locations in two distant neighborhoods, Uptown and Downtown. Uptown customers' demand is given by $Q_{U T}=1,000-10 P$, where $Q$ is the number of cars detailed per month; Downtown customers' demand is $Q_{D T}=1,600-20 P$. The marginal and average cost of detailing a car is constant at $\$ 20$. a. Determine the price that maximizes Kip's profit if he prices uniformly in both markets. How many customers will he serve at each location? What are his total profits? \[ P=\$ \] \[ Q_{D T}= \] customers \[ Q_{U T}= \] \[ \text { Profit }=\$ \] b. Suppose Kip decides to charge different prices at each location. What price should he establish in each location? What are his total profits? \[ P_{U T}=\$ \] \[ P_{D T}=\$ \] \[ \text { Profit }=\$ \] c. How big are the gains to Kip's differential pricing scheme?
Public Answer
