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A manufacturer faces a linear price response function d(p)=8000 – 200p. The unit production cost is...

A manufacturer faces a linear price response function d(p)=8000 – 200p. The unit production cost is $10. The manufacturer can segment market into two parts by promising different lead times.

(a) If the separating price is at $30, what are the optimal prices for the two segments? What is the total profit?

(b) If the separating price is at $20, what are the optimal prices for the two segments? What is the total profit?

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