Return to the bicycle manufacturer NatBike in Exercise 6. Now assume that a customized bicycle costs $300 to manufacture, whereas a standardized bicycle costs $200 to manufacture, with all other data...

Return to the bicycle manufacturer NatBike in Exercise 6. Now assume that a customized bicycle costs $300 to manufacture, whereas a standardized bicycle costs $200 to manufacture, with all other data as in Exercise 6. What price should NatBike charge each segment if there is no capacity constraint? What price should NatBike charge each segment if the total available capacity is 20,000 bicycles? What is the total profit in each case?

Exercise 6

Nat Bike, a bicycle manufacturer, has identified two customer segments, one that prefers a customized bicycle and is willing to pay a higher price and another that is willing to take a standardized bicycle but is more price sensitive. Assume that the cost of manufacturing either bicycle is $200. Demand from the customized segment has a demand curve of d1 = 20,000 – 10p1 and demand from the price-sensitive standard segment is d2 = 40,000 – 30p2. What price should Nat Bike charge each segment if there is no capacity constraint? What price should Nat Bike charge each segment if the total available capacity is 20,000 bicycles? What is the total profit in each case?