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IF the cost of production for $H$ is $\\\$8000$ and the cost of production for $L$ is $\\\$5000$ (as you seem to be assuming), then $$ \frac{10000-8000}{500}=Y_{H}^{max} = 4 $$ $$ \frac{10000-5000}{1000}=Y_{L}^{max} = 5 $$

However, I think there must be more to this question than you have included. For instance, what is the valuation of warranty length by the customers? Are those numbers really the cost of production?

(Not sure if this response follows protocol, but I cannot post comments yet).

IF the cost of production for $H$ is $\\\$8000$ and the cost of production for $L$ is $\\\$5000$ (as you seem to be assuming, then $$ \frac{10000-8000}{500}=Y_{H}^{max} = 4 $$ $$ \frac{10000-5000}{1000}=Y_{L}^{max} = 5 $$

However, I think there must be more to this question than you have included. For instance, what is the valuation of warranty length by the customers? Are those numbers really the cost of production?

(Not sure if this response follows protocol, but I cannot post comments yet).

IF the cost of production for $H$ is $\\\$8000$ and the cost of production for $L$ is $\\\$5000$ (as you seem to be assuming), then $$ \frac{10000-8000}{500}=Y_{H}^{max} = 4 $$ $$ \frac{10000-5000}{1000}=Y_{L}^{max} = 5 $$

However, I think there must be more to this question than you have included. For instance, what is the valuation of warranty length by the customers? Are those numbers really the cost of production?

(Not sure if this response follows protocol, but I cannot post comments yet).

Source Link

IF the cost of production for $H$ is $\\\$8000$ and the cost of production for $L$ is $\\\$5000$ (as you seem to be assuming, then $$ \frac{10000-8000}{500}=Y_{H}^{max} = 4 $$ $$ \frac{10000-5000}{1000}=Y_{L}^{max} = 5 $$

However, I think there must be more to this question than you have included. For instance, what is the valuation of warranty length by the customers? Are those numbers really the cost of production?

(Not sure if this response follows protocol, but I cannot post comments yet).