Question: Phillips manufactures a certain product that can be sold directly to retail outlets or to the Superior Company for further processing and eventual sale as a completely different product. The demand function for each of these markets is

Retail Outlets: P? = 60 – 2Q?

Superior Company P2 = 40 - Q?

Where P ? and P ? are the prices charged and Q? and Q? are the quantities sold in the respective markets. Phillips total cost function for the manufacture of this product is

TC = 10 + 8(Q? + Q?)

a. Determine Phillips total profit function

b. What are the profit maximizing price and output levels for the product in the two markets?

c. At these levels of output, calculate the marginal revenue in each market.