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 theCEO 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 eachmarket 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 Autocan 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 ofto nearest number):Question:1. Equilibrium Price2. Quantity of cars sold in Europe and In the US3. Total Profit

Given; Marginal cost= $100Total fixed cost=$10000Demand for LI Auto in Europe; QE=6000-8PEDemand for…

Answered: I Auto can produce any quantity of cars…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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