Answer Happy

Part 5 6 7 8 9 solution needed
Suppose that market demand is linear, q = 70
- p. Marginal costs are constant and equal to 10. The
upstream firm, which is a manufacturer, does not sell
directly but through a single downstream firm, which is
a retailer. The manufacturer set the wholesale
price w at stage 1. At stage 2, the retailer who
is assumed not to incur any costs except wholesale price
(w), observes the wholesale price and sets the retail
price p.
1.Find the optimal wholesale price (w*):
2.Find the optimal retail price (p∗):
3.Find the quantity demanded (q∗) that corresponds
to p∗:
4.Find the manufacturer’s profit (π*M)
that corresponds to p∗:
5.Find the retailer’s profit (π∗R) that
corresponds to p∗:
6.Find the overall channel profit (Π∗ =
π*M+ π*R):
Next, consider a case that the integrated firm produce the
product and sell directly to consumers. Suppose the market demand
is q = 70 - p. Marginal costs are
constant and equal to 10.
7.Find the optimal retail price (pi):
8.Find the quantity demanded (qi) that
corresponds to pi :
9.Find the firm’s profit (πi) that corresponds
to pi :