Tiger-el is an upstream manufacturer of electric trains that sells wholesale to Ihe Great Toy Store, the only such store in the area. Demand for the trains at the retail store level in inverse form is P 1,000- 2Q, where Q is the total number of trains sold. The Great Toy Store incurs no service cost in selling the train. Its only cost is the wholesale price it pays for each train. Tiger-el incurs a production cost of $40 per train. a. What wholesale price should Tiger-el charge for its trains? What price will these trains sell for at retail? How many trains will be sold? b. What profit will the toy store and the retailer earn under the pricing choices found in part (a)? c. How would the quantity of trains sold and the retail price change if Tiger-el sold the trains to The Great Toy Store at cost but also received a 66.67% sales royalty on every train sold? How would your profit calculations in part (b) change?

Tiger-el is an upstream manufacturer of electric trains that sells wholesale to Ihe Great Toy Store, the only such store in the area. Demand for the trains at the retail store level in inverse form is P 1,000- 2Q, where Q is the total number of trains sold. The Great Toy Store incurs no service cost in selling the train. Its only cost is the wholesale price it pays for each train. Tiger-el incurs a production cost of $40 per train. a. What wholesale price should Tiger-el charge for its trains? What price will these trains sell for at retail? How many trains will be sold? b. What profit will the toy store and the retailer earn under the pricing choices found in part (a)? c. How would the quantity of trains sold and the retail price change if Tiger-el sold the trains to The Great Toy Store at cost but also received a 66.67% sales royalty on every train sold? How would your profit calculations in part (b) change?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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