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Great Cars, Inc. faces the following demand function for its automobiles:

P = 55,000 – 200 Q

Its marginal cost (MC) is $9,000. What will its price be if it decides to sell the automobiles by it and what will the price be if it sells though DistriCorp, Inc. an independent distributor. Note that when Great Cars, Inc. contracts with DistriCorp, it has to take into account that DistriCoro faces the same demand curve. What is the consequence of this exclusive dealing on prices?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91235593

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