GuitarAmp, Ltd. is a company that sells electric guitar amplifiers in the US and the EU. The inverse demand functions for the two markets are given as Pus 10 – Yus and Peu = 6 – %3D SYEU, respectively. The amps for both markets are manufactured in Indonesia with a fixed marginal cost of $2 and sold to clients only through its online retail stores (assume the online stores are affiliates of the company and that the profits are directly recorded by GuitarAmp, Ltd.). Due to its unique patented technology, the company is a monopoly in both markets. а. Assuming GuitarAmp, Ltd. has an exclusive territorial online retail agreement in each market with its vendors (an online vendor in the US cannot sell to an address in Europe, and vice versa), what would be the profit-maximizing prices and quantities in the US and the EU? What are the profits from each market? b. Assume, instead of the exclusive territorial agreements, GuitarAmp, Ltd. has one global retail agreement with its online vendor that sells to both markets. Drawing a diagram (with the proper labels) show the combined market demand and marginal is the price? What is the total profit? How many amps does the company revenue. W sell in each market? с. If GuitarAmp, Ltd. could perfectly price discriminate in the combined market from part (b), what would be the price and quantity? What is the total profit?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question

hi, this is a microecomy question. ı need answer ASAP!

GuitarAmp, Ltd. is a company that sells electric guitar amplifiers in the US and the EU. The
inverse demand functions for the two markets are given as pus
Peu = 6 –
YEU, respectively. The amps for both markets are manufactured in Indonesia with a fixed
marginal cost of $2 and sold to clients only through its online retail stores (assume the online
stores are affiliates of the company and that the profits are directly recorded by GuitarAmp,
Ltd.). Due to its unique patented technology, the company is a monopoly in both markets.
= 10 – Yus
and
а.
Assuming GuitarAmp, Ltd. has an exclusive territorial online retail agreement
in each market with its vendors (an online vendor in the US cannot sell to an address in
Europe, and vice versa), what would be the profit-maximizing prices and quantities in
the US and the EU? What are the profits from each market?
b.
Assume, instead of the exclusive territorial agreements, GuitarAmp, Ltd. has
one global retail agreement with its online vendor that sells to both markets. Drawing a
diagram (with the proper labels) show the combined market demand and marginal
revenue. What is the price? What is the total profit? How many amps does the company
sell in each market?
С.
If GuitarAmp, Ltd. could perfectly price discriminate in the combined market
from part (b), what would be the price and quantity? What is the total profit?
Transcribed Image Text:GuitarAmp, Ltd. is a company that sells electric guitar amplifiers in the US and the EU. The inverse demand functions for the two markets are given as pus Peu = 6 – YEU, respectively. The amps for both markets are manufactured in Indonesia with a fixed marginal cost of $2 and sold to clients only through its online retail stores (assume the online stores are affiliates of the company and that the profits are directly recorded by GuitarAmp, Ltd.). Due to its unique patented technology, the company is a monopoly in both markets. = 10 – Yus and а. Assuming GuitarAmp, Ltd. has an exclusive territorial online retail agreement in each market with its vendors (an online vendor in the US cannot sell to an address in Europe, and vice versa), what would be the profit-maximizing prices and quantities in the US and the EU? What are the profits from each market? b. Assume, instead of the exclusive territorial agreements, GuitarAmp, Ltd. has one global retail agreement with its online vendor that sells to both markets. Drawing a diagram (with the proper labels) show the combined market demand and marginal revenue. What is the price? What is the total profit? How many amps does the company sell in each market? С. If GuitarAmp, Ltd. could perfectly price discriminate in the combined market from part (b), what would be the price and quantity? What is the total profit?
Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Clean Air Act
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education