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Managerial Economics & Organizational Architecture 6th Edition by James Brickley , Clifford Smith ,Jerold Zimmerman
Edition 6ISBN: 978-0073523149Managerial Economics & Organizational Architecture 6th Edition by James Brickley , Clifford Smith ,Jerold Zimmerman
Edition 6ISBN: 978-0073523149 Exercise 20
ANALYZING MANAGERIAL DECISIONS: BioChem Pricing Policy
BioChem has a patent on a chemical product, that is, used as a key input in producing farm and home agricultural fertilizer. Currently, BioChem produces the product and sells it to companies who manufacture the final products for the farm and home users. BioChem faces the following demand curves from the farm and home market segments:
Farm: P = 300 - 10 Q
Home: P = 100 - 5 Q
BioChem can produce the product at a constant marginal cost of $1.
Calculate the optimal prices that BioChem would like to charge in each market segment to maximize profits.
BioChem has a patent on a chemical product, that is, used as a key input in producing farm and home agricultural fertilizer. Currently, BioChem produces the product and sells it to companies who manufacture the final products for the farm and home users. BioChem faces the following demand curves from the farm and home market segments:
Farm: P = 300 - 10 Q
Home: P = 100 - 5 Q
BioChem can produce the product at a constant marginal cost of $1.
Calculate the optimal prices that BioChem would like to charge in each market segment to maximize profits.
Explanation
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Arbitrage is an act of purchasing from o...
Managerial Economics & Organizational Architecture 6th Edition by James Brickley , Clifford Smith ,Jerold Zimmerman
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