Asked by
sukesh rohith
on Oct 14, 2024
Verified
Roach Motors is the dominant used-car dealer in a small Midwestern city.After paying $50,000 for overhead, Roach Motors' cost per car is $500.There are 5 other small used-car lots in this town, but since they are not large enough to purchase cars through the same discount sources as Roach, each firm faces the cost function C 5,000 700Q 5Q2.The demand for used cars is Q 500 P1/10.Assuming Roach is aware of its competitors' costs, what price should Roach set for a used car?
A) $1,325
B) $616.67
C) $958.33
D) $729.17
E) $1,675
Discount Sources
Various origins from which price reductions can be obtained, such as coupons, sales promotions, or bulk buying.
Cost Function
A mathematical formula used to calculate the total cost of production based on the quantity of goods produced.
Used-Car Dealer
A business specializing in the resale of previously owned vehicles, often offering trade-in deals and warranty services.
- Investigate the consequences of monopoly power and its influence on production output and price setting.
- Investigate the effects of cost configurations on business strategy decisions and outcomes in the marketplace.
Verified Answer
VM
Learning Objectives
- Investigate the consequences of monopoly power and its influence on production output and price setting.
- Investigate the effects of cost configurations on business strategy decisions and outcomes in the marketplace.