Question

Fast and Furious XII is being released on HBO simultaneously in

Asia and in Europe later this year. Demand has been estimated as:
Q(p) = 500,000 − 12,500p in the Asia and Qd(p) = 80,000

Answer 1

The studio should set the rental price at $20 in Asia and $16 in Europe to maximize revenue in each region.

To determine the optimal prices for HBO rental of the film in Asia and Europe, we need to find the prices that maximize the total revenue in each region.

Total revenue is calculated as the product of price and quantity (rentals):

Total Revenue (TR) = Price (p) × Quantity (Qd)

Given the demand functions for Asia and Europe:

For Asia: Q