Table 14-6

There are two custom carport manufacturers in Louisiana, Under Cover (U)and Made for Shade (M). Under Cover has been in the market for a long time and must now compete with newcomer, Made for Shade. Suppose that Under Cover believes that Made for Shade will match any price it sets. Use Table 14-6 to answer the following question and assume throughout that Under Cover believes that Made for Shade will match any price it sets.
-Refer to Table 14-6.What price will Under Cover charge and what profit does Under Cover expect to make?

Question

Table 14-6
  
There are two custom carport manufacturers in Louisiana, Under Cover (U)and Made for Shade (M). Under Cover has been in the market for a long time and must now compete with newcomer, Made for Shade. Suppose that Under Cover believes that Made for Shade will match any price it sets. Use Table 14-6 to answer the following question and assume throughout that Under Cover believes that Made for Shade will match any price it sets.
-Refer to Table 14-6.What price will Under Cover charge and what profit does Under Cover expect to make?

Quizplus · Accepted Answer

According to Table 14-6, at a price of $15,000, Under Cover's expected profit is $10 million, which is the highest among all the given options. Since Under Cover believes that Made for Shade will match any price it sets, it makes sense for them to set the highest possible price that will still yield a reasonable profit. Therefore, the best choice is C.

Table 14-6 There Are Two Custom Carport Manufacturers in Louisiana, Under Cover