2) Ann McCutcheon is hired as a consultant to a firm producing ball bearings. This firm sells in two distinct markets, each of which is completely sealed off from the other. The demand curve for the firm's output in the first market is P₁ = 160 - 8Q1, where P₁ is the price of the product and Q₁ is the amount sold in the first market. The demand curve for the firm's output in the second market is P2 = 80-2Q2, where P2 is the price of the product and Q2 is the amount sold in the second market. The firm's cost function is C = 5Qr+ 0.5Q²r, where Qr is the firm's entire output (destined for either market). Managers ask Ann McCutcheon to suggest a pricing policy. a) How many units of output should she tell managers to sell in each market? b) What price should managers charge in each market?

2) Ann McCutcheon is hired as a consultant to a firm producing ball bearings. This firm sells in two distinct markets, each of which is completely sealed off from the other. The demand curve for the firm's output in the first market is P₁ = 160 - 8Q1, where P₁ is the price of the product and Q₁ is the amount sold in the first market. The demand curve for the firm's output in the second market is P2 = 80-2Q2, where P2 is the price of the product and Q2 is the amount sold in the second market. The firm's cost function is C = 5Qr+ 0.5Q²r, where Qr is the firm's entire output (destined for either market). Managers ask Ann McCutcheon to suggest a pricing policy. a) How many units of output should she tell managers to sell in each market? b) What price should managers charge in each market?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Joe has just moved to a small town with only one golf course, the Northlands Golf Club. His inverse demand function is p=140-2q, where q is the number of rounds of golf that he plays per year. The manager of the Northlands Club negotiates separately with each person who joins the club and can therefore charge individual prices. This manager has a good idea of what Joe's demand curve is and offers Joe a special deal, where Joe pays an annual membership fee and can play as many rounds as he wants at $20, which is the marginal cost his round imposes on the Club. Joe marries Susan, who is also an enthusiastic golfer. Susan wants to join the Northlands Club. The manager believes that Susan's inverse demand curve is p=120-2q. The manager has a policy of offering each member of a married couple the same two-part prices, so he offers them both a new deal. What two-part pricing deal maximizes the club's profit? Will this new pricing have a higher or lower access fee than in Joe's original deal?…
Two firms (called firm 1 and firm 2) are the only sellers of a good for which the demand equation is Here, q is the total quantity of the good demanded and p is the price of the good measured in dollars. Neither firm has any fixed costs, and each firm’s marginal cost of producing a unit of goods is $2. Imagine that each firm produces some quantity of goods, and that these goods are sold to consumers at the highest price at which all of the goods can be sold. A Cournot equilibrium in this environment is a pair of outputs (q1, q2) such that, when firm 1 produces q1 units of goods and firm 2 produces q2 units of goods, neither firm can raise its profits by unilaterally changing its output. Find the Cournot equilibrium. Determine whether the price at which the goods are sold exceeds marginal cost.
None
0:29:15 Suppose that the market demand for a certain product is given by P = 670 – Q. where Qis total industry output. There are only three firms F, F,, F, that manufacture that product. The three firms have the following marginal costs: c = 32, c2 = 34 and C3 = 36. The leader (F) makes a production decision q1. F2, after observing the quantity chosen by F chooses its own quantity q2. Finally F3, after observing the quantities chosen by F, and F, chooses its own quantity q3. a) Determine the output levels that will be produced in a Stackelberg -Nash equilibrium 91 = 93 = b) Determine the price level in such an equilibrium P= c) Determine the profit levels in such an equilibrium U1 = uz=
Eric owns a plot of land in the desert that isn't worth much. One day, a giant meteorite falls on his property, making a large crater. The event attracts scientists and tourists, and Eric decides to sell nontransferable admission tickets to the meteor crater to both types of visitors: scientists (Market A) and tourists (Market B). The following graphs show daily demand (DD) curves and marginal revenue (MRMR) curves for the two markets. Eric's marginal cost of providing admission tickets is zero. PRICE (Dollars per ticket) 20 18 16 9 09 2 0 0 1 Market A MR 2 3 4 5 6 7 8 QUANTITY (Admission tickets) Pricing Policy Nondiscriminatory Discriminatory D 0 10 Total Revenue (Dollars) PRICE (Dollars per ticket) 20 18 18 14 12 10 8 4 2 0 0 1 low Market B Imagine that at first, Eric charges the same price of $8 per admission in both markets so that the total number of admissions demanded is Tickets. Imagine now that Eric decides to charge a different price in each market. To maximize revenue, Eric…
Suppose that BMW can produce any quantity of cars at a constant marginal cost equal to $20,00 and a fixed cost of $10 billion. You are asked to advise the CEO as to what prices and quantities BMW should set for sales in Europe and in the United States. The demand for BMWs in each market is given by QE=4,000,000−100PE and QU=1,500,000−20PU where the subscript E denotes Europe, the subscript U denotes the United States. Assume that BMW can restrict U.S. sales to authorized BMW dealers only. a. What quantity of BMWs should the firm sell in each market, and what should the price be in each market? What should the total profit be? (round dollar amounts to the nearest penny and quantities to the nearest integer) In Europe equilibrium quantity is 1,000,000 cars at an equilibrium price of $30,000 In United States equilibrium quantity is 550,000 cars at an equilibrium price of $47,500 BMW makes a total profit of $15.125 billion. I Need help with this part: If BMW were forced…
Determine the equilibrium price, output and profit for each firm assuming firm 1is the first mover and firm 2 is the follower
Exercise A.9 In a market only two firms produce a homogeneous good. You work on one of them and are tasked with drawing up the production strategy for the coming year. The two companies in the market have the same information and the objective of both is the maximization of their profit. You know: the inverse market demand curve of the good: P(Q)=200-2Q where Q = q₁ + q₂ , the function that represents the costs of your company and the rival company: C(qᵢ) = 20qᵢ (for i=1, 2), and the data in the following table, with the optimal decisions according to the different types of competition:C(qᵢ) = 20qᵢ and the data in the following table, with the optimal decisions according to the different types of competition: q1 q2 P Bertrand 45 45 20 Cournot 30 30 80 Collusion 22,5 22,5 110 a) What is more in your company's interest to compete or cooperate with the rival company? Keep in mind that explicit collusion agreements are illegal, so each…
Pizzaroni Cafe on the boardwalk in a popular New Jersey seaside town owned by Angelo McDonald. Situation: Due to the booming tourist season and the exceptional meals he prepares, Angelo is frequently forced to turn away patrons because he does not have enough room to accommodate everyone or because he does not have enough servers and kitchen help, especially on Friday and Saturday nights. Currently, the Pizzaroni Cafe has several pinball and video games that are barely earning enough to pay their monthly rental fees. Angelo brags that the tables in his establishment are exceptionally roomy and have large areas of space in- between tables. Chuck’s Hoagie House, the eating establishment alongside of him in the same building has difficulty attracting patrons due to a rumor that several customers contracted food poisoning last September at his establishment. A) What possible options are available to Angelo to increase the number of patrons he can serve in the short run in an effort to…
Suppose that the Bob Buttons Company (BBC) enters the market. BBC has the same cost function of c=3q+1. Let denote q1 the quantity sold by ABC and denote the q2 quantity sold by BBC. Now suppose that ABC and BBC reach a Cournot equilibrium. Q: What would be the net change in ABC’s profit as a result of BBC’s entry into the market?____ (type in a negative number if ABC’s profit decreases) (please see the attachement for partial of my work, not sure if it's correct, thank you!)