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2) Coach Industries is a market leader in the RV industry and sells RVs in both...

2) Coach Industries is a market leader in the RV industry and sells RVs in both Europe and the United States. Demand from Europe can be represented by PE=18,000-3QE and demand from North America can be represented by PN=60,000-20QN. The firm estimates marginal costs to be constant at $12,000 per RV.

a) Should Coach charge the same price in each market? What price(s) should it charge? How much should it plan to sell in each market at these prices?

b) Calculate the own-price elasticities in each of these markets at the optimal quantities chosen in part a). Are these prices consistent with what you know about 3rd degree price discrimination? Why or why not?

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