CamCo makes inexpensive 35mm cameras. Its subsidiary, InFocus, Inc., makes the l

Question

CamCo makes inexpensive 35mm cameras. Its subsidiary, InFocus, Inc., makes the lenses for the cameras. The market for such lenses is highly competitive, and they can be either bought or sold at the equilibrium market price of $2. CamCo estimates the demand for its cameras to be Qc = 12,000 – 400Pc. This implies that Pc = 30 - .0025Qc and MR = 30 - .005Qc.The marginal cost of manufacturing the cameras, not including the cost of the lenses, is constant and equal to $5. The marginal cost of the InFocus division for making the lenses is given by the equation MCl = 0.30 + 0.0004Ql. Each camera requires one lens. How many cameras will Camco produce and what price will be charged for each?

Explain your answer

d.

Explanation / Answer

b.4574 and $18.56

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