Roach Motors Is the Dominant Used-Car Dealer in a Small

question 28

Multiple Choice

Roach Motors is the dominant used-car dealer in a small Midwestern city. After paying $50,000 for overhead, Roach Motors' cost per car is $500. There are 4 other small used-car lots in this town, but since they are not large enough to purchase cars through the same discount sources as Roach, each firm faces the cost function C = 5,000 + 600Q + 5Q². The demand for used cars is Q = 600 - . Assuming Roach sets the market price so as to maximize its profit, how many cars will each of the follower firms supply?

• A) 25
• B) 33
• C) 28
• D) 29
• E) 27

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Definitions:

Geographic Market Segments

The division of a market into smaller homogeneous groups based on their geographical boundaries or locations.

Real Estate

Property consisting of land and the buildings on it, along with its natural resources, such as crops, minerals, or water.

Target Market Segments

Specific groups of potential customers identified by companies as the most likely to purchase their products or services.

Reposition

The strategy of changing the market position of a product or brand, often to target new demographics or market segments.