I Auto can produce any quantity of cars at a constant marginal cost equal to $100 and a total foced cost of $10000 globally You are asked to advise the CEO as to what prices and quantities LI Auto should set for car sales in Europe and in the US to maximize its profits The demand for LI Auto in each market is given by Q= 6000 -8P and Q, = 4000 - 2 Pwhere the subscript E denotes Europe, the subscript U denotes the US Assume that LI Auto can restrict Europe or US car sales to authorized LI Auto dealers only. It, by an international agreement between Europe and US, LI Auto was forced to charge the same price in each market, calculate the following (round off to nearest number): Question: 1. Equilibrium Price 2. Quantity of cars sold in Europe and In the US 3, Total Profit
I Auto can produce any quantity of cars at a constant marginal cost equal to $100 and a total foced cost of $10000 globally You are asked to advise the CEO as to what prices and quantities LI Auto should set for car sales in Europe and in the US to maximize its profits The demand for LI Auto in each market is given by Q= 6000 -8P and Q, = 4000 - 2 Pwhere the subscript E denotes Europe, the subscript U denotes the US Assume that LI Auto can restrict Europe or US car sales to authorized LI Auto dealers only. It, by an international agreement between Europe and US, LI Auto was forced to charge the same price in each market, calculate the following (round off to nearest number): Question: 1. Equilibrium Price 2. Quantity of cars sold in Europe and In the US 3, Total Profit
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:LI Auto can produce any quantity of cars at a constant marginal cost equal to $100 and a total foxed cost of $10000 globally You are asked to advise the
CEO as to what prices and quantties LI Auto should set for car sales in Europe and in the US to maximize its profits The demand for LI Auto in each
market is given by Og= 6000-8 P and Q, = 4000-2 P,where the subscript E denotes Europe, the subscript U denotes the US. Assume that LI Auto
can restrict Europe or US car sales to authorized LI Auto dealers only.
If, by an international agreement between Europe and US, LI Auto was forced to charge the same price in each market, calculate the following (round of
to nearest number):
Question:
1. Equilibrium Price
2. Quantity of cars sold in Europe and In the US
3. Total Profit
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