NonLegal Seafoods (NS) sells its excellent clam chowder in Boston, New York, and Washington. NS has estimated that the demands in these three markets are respectively QB = 10,000 − 1,000PB, QNY = 20,000 − 2,000PNY and QW = 15,000 − 1,500PW, where quantities are pints of clam chowder per day. The marginal cost of making a pint of clam chowder in their Boston facility is $1. In addition, it costs $1 per pint to ship the chowder to New York and $2 per pint to ship to Washington.
a. What are the profit maximizing prices that NS should set in these three markets? How much chowder is sold per day in each market?
b. What profit does NS make in each market?