Suppose a food company has both food and store divisions. The food division produces burgers that are sold downstream at the store. Assume that the store sells 1,000 burgers at $10, 2,000 burgers at $9, 3,000 at $8, and so on up to 10,000 burgers at $1. The price the food division charges for a burger is $3.50. What will be the profit-maximizing price for the entire company? How much profit will the company make? What is the revenue-maximizing quantity for the store?

Suppose a food company has both food and store divisions. The food division produces burgers that are sold downstream at the store. Assume that the store sells 1,000 burgers at $10, 2,000 burgers at $9, 3,000 at $8, and so on up to 10,000 burgers at $1. The price the food division charges for a burger is $3.50. What will be the profit-maximizing price for the entire company? How much profit will the company make? What is the revenue-maximizing quantity for the store?

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter23: Profit Maximization

Section: Chapter Questions

Problem 1E

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