Write down the profit-maximizing prices and quantities of

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Suppose that the Ford motor company can produce any quantity of cars at a constant marginal cost equal to $15,000 and a fixed cost of $20 million. You are asked to advise theCEO as to what prices and quantities Ford should set for sales in Europe and in the U.S. The demand for Fords in each market is given by:

where the subscript E denotes Europe, the subscript U denotes the United States, and all prices and costs are in thousands of dollars. Assume that Ford can restrict U.S. sales to authorized Ford dealers only.

a. What are the profit-maximizing prices and quantities of Fords for the European market? the US market?

b. What is the total profit?

Reference no: EM13392116

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