American currently sells brand name tires at wholesale

Reference no: EM13391545

Discount stores for private labeling. Marginal cost is a constant $10 per tire, regardless of the sub-market in which the tire is sold. The firm has estimated the following demand curves for each of the markets.

QB = 70 - 2000PB (brand name)
QP = 20 - 5000PB (private label).

Quantities are measured in thousands per month and price refers to the wholesale price. American currently sells brand name tires at a wholesale price of $28.50 and private label tires for a price of $17. Are these prices optimal for the firm?

Reference no: EM13391545

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