Question

2. You manage a farm that is looking to sell oranges in both California and Oregon. The demand for oranges in California is given by P^CA = 25 - 0.5Q_^CA and the demand for oranges in Oregon is P^OR = 19 - 0.3Q^OR. The total cost of selling oranges is TC = 10 + Q and the marginal cost is constant at MC = $1. If you can differentiate between customers in California and Oregon, you should charge a price of $312 in California and a price of $300 in Oregon.

3. You manage a farm that is looking to sell oranges in both California and Oregon. The demand for oranges in California is given by P^CA = 25 - 0.5Q_^CA and the demand for oranges in Oregon is P^OR = 19 - 0.3Q^OR. The total cost of selling oranges is TC = 10 + Q and the marginal cost is constant at MC = $1. If you cannot differentiate between customers in California and Oregon, and you are forced to charge the price that is optimal in California in both Oregon and California, how much profit will you lose compared to the profit you made in (2).

Answer 1

SOLUTION:

The first part indicates the prices to be $312 and $300, however, they must be much smaller units for the question to be appropriate. However, the solution has been given according to the problem.