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    Finding the optimal price and output levels

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    2. Your company sells its product online and in stores. Your marginal cost $30 is the same in both markets. The demand and marginal revenue curves in the two markets are different however.
    Qonline = 1,000-2 Ponline
    MRonline = 500-Qonline

    Qstores = 200-Pstores
    MRstores = 200-2 Qstores

    2.1 What is the profit maximizing price level in each market?
    Online
    Stores

    2.2 At those prices, what output is sold in each market?
    Online
    Stores

    2.3 Which market has a more elastic demand?

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    Solution Preview

    2.1 What is the profit maximizing price level in each market?

    Online :
    Profit will be maximized when MRonline=MC.
    500-Qonline=30
    Qonline=470

    Qonline =1000-2 Ponline
    Put ...

    Solution Summary

    Solution describes the steps to calculate optimal price and output combination in each of the given market segments.

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