Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / Consolidated Salt Company sells table salt to both retail grocery chains and commercial users

Consolidated Salt Company sells table salt to both retail grocery chains and commercial users

Consolidated Salt Company sells table salt to both retail grocery chains and commercial users (eg, bakeries, snack food makers, etc) The demand function for each of these markets is:

Retail grocery chains: P1 = 180 – 8Q1
Commercial users: P2 = 100 – 4Q2

where P1 and P2 are the prices charged and Q1 and Q2 are the quantities sold in the respective markets Consolidated’s com/economics/short-and-long-run-cost-functions”>total cost function (which includes a “normal” return to the owners) for salt is:
TC = 20(Q1 + Q2)

(a) Determine Consolidated’s total profit function
(b) Assuming that Consolidated is effectively able to charge different prices in the two markets, what are the profit-maximizing price and output levels for the product in the two markets? What is Consolidated’s total profit under this condition?
(c) Assuming that Consolidated is required to charge the same price in each market, what are the profit-maximizing price and output levels? What is Consolidated’s total profit under this condition?

Mar 19 2020 View more View Less

Answer (UnSolved)

question Get Solution

Related Questions