Find the price-response function corresponding

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Reference no: EM133426003

Question: A compact car manufacturer has conducted a market test and found that the willingness-to-pay distribution of its customers is Uniform (0, $25000). The total market size for the car they manufacture is 2,500,000. The car manufacturer can manufacture cars for an incremental cost of $15,000 apiece.

Find the price-response function corresponding to the willingness-to-pay distribution of the customers of the car manufacturer. Verify that the willingness-to-pay distribution corresponding to the price-response function you just found is Uniform (0, $25000).
Find the contribution maximizing price, the total contribution, the demand, and the price elasticity at the contribution maximizing price.
With the market segmented at $18,000 find the prices the maximize contribution.
With the market segmented as in Part b, if the cannibalization rate is 5 percent, what prices should the car manufacturer offer to maximize contribution?
Find the optimum segmentation level without cannibalization.
Find the optimum segmentation level with a cannibalization rate of 5 percent.
If the manufacturing capacity is constrained to 350,000 cars, what is the price that maximizes contribution?
If the market is segmented at the price of $18,000, and capacity is still constrained at 350,000 cars, what prices should the manufacturer change to maximize contribution?

Reference no: EM133426003

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