Sanford Inc. currently competes in a duopoly. The market price is $10 and Sanford's annual profit is $10 million. If Sanford were the only firm in the market, it could charge the monopoly price of $25 per unit and earn $35 million annually for an indefinite period of time. By charging $5 per unit for one year, Sanford could drive its rival out of the market and maintain a monopoly position indefinitely. However, this strategy will result in a $20 million loss since its marginal cost is $8 per unit.
a. What pricing strategy is the manager considering?
b. Ignoring legal considerations, is this pricing strategy profitable? Assume the interest rate is 5
percent and, for simplicity, that any current period profits or losses occur immediately (at the
beginning of the year).
Answers (1)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Sanford Inc. currently competes in a duopoly. The market price is $10 and Sanford's annual profit is $10 million. If Sanford were the only ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
1. ABC Inc. showed the following operating budget for the next year. Sales $2,100,000 Fixed cost $650,000 Total variable cost 350,000 Total cost 1,000,000 Net Income $1,100,000 Answer the following questions: Keep 8 decimal places for the
Answers (1)
Percy's GPA is 2.75, so he should list it on his résumé.
Answers (1)
44) Which type of annuity pays an amount per year to you and your spouse until the last one dies? a. Level income annuity b. IRA annuity c. Joint and survivor annuity d. Life-only annuity
Answers (1)
A manufacturer uses the company's sales force and trade promotions to carry, promote, and sell products to end users.
Answers (1)
Samco signed a 5 -year note payable on January 1, 2018 , of $ 475 comma 000. The note requires annual principal payments each December 31 of $ 95 comma 000 plus interest at 9 %.
Answers (1)
New Questions in Business
A child in a child passenger restraint system (car seat) should.
Answers (1)
Compare items that are exempt and nonexempt from Chapter 7 fillings. (does A B C or D go with 1 or 2) (each letter must go with one) (1) Exempt (2) Nonexempt (A) second car (B) pension (C) household appliances (D) family heirlooms
Answers (1)
A structure within which executives, managers, specialists, and workers are broken out is commonly known as what type of structure?
Answers (1)
What way of calculating ROI makes it easiest to compare investments?
Answers (1)
Select the correct answer. Which assumption is a factor in Ricardo's Theory of International Trade? A. trade flow is restricted across borders B. trade laws are different in different nations C. labor is an irrelevant factor of production D.
Answers (1)