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The demand for action figures based on characters from children's movies is extremely high around the time the movie is released. In this peak period, demand for action figures is
= 300,000 - 10,000P P = 30 - 0.0002
.
The resulting marginal revenue curve is MR(Qpk) = 30 - 0.0004 Qpk. Some time after the movie release, interest in the action figures wanes. In this lull period, demand for the action figures becomes
= 100,000 - 25,000P P = 4 - 0.00008
. The resulting lull period marginal revenue curve is MR(QI) = 4 - 0.00016 QI. Suppose the marginal costs of producing the action figures are constant at $1.50. What is the optimal pricing strategy in the two different periods?
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