GivenQuestion #1Cost function C= 3000+6QQ = 4400 - 200Q Q= 1600 P = 14Profit= 22400-12600 = 9800 Question #2 Q=$480 - Laredo Q=$1120 - SAQuestion #3Ed=−1.25 - Laredo Ed=−0.55 - SA0.5<0.8− markup index it is charging less. - Laredo 0.64<-1/-0.55--markup index it is charging less. - SAPlease answer question number #4 (A-C) For Laredo only 2. Demand across the two locations - After taking your managerial economics class, you realize that youcan probably raise your profits by price discriminating by charging different prices in the two locations.You then break down sales across the two locations.In Laredo: You sold 960 burger meals per week at $10 and 600 meals at $13.In San Antonio: You sold 1440 meals per week at $10 and 1200 meals at $133.A. Using the two prices above, estimate your demand function in Laredo. What would demand beat the optimal price from Q1B. Using the two prices above, estimate your demand function in San Antonio. What would demandbe at the optimal price from Q1?Elasticities across the two locationsA. Calculate the point price elasticity of demand at the optimal price for Q1 (and quantityfrom Q2) in LaredoB. Calculate the point price elasticity of demand at the optimal price for Q1 (and quantityfrom Q2) in San AntonioC. Assuming that your marginal costs are $6, are you charging more, less, or exactly theoptimal price in LaredoHint: Calculate markup on price (Lerner's index) and compare it to- from earlier questionEdD. Assuming that your marginal costs are $6, are you charging more, less, or exactly theoptimal price in San AntonioHint: Calculate markup on price (Lerner's index) and compare to1Edfrom earlier questionE. Based on your analysis, describe how you should adjust prices in Laredo and San Antonio 4. Optimal price in LaredoYou decide to charge different prices in the two locations. To do this, you decide to use the demandfunctions you estimated in Q2 to calculate separate optimal prices in the two locations. For your costs inLaredo, you have fixed costs of $1000 per week. In addition, it costs you six dollars per burger in variablecosts (ingredients, labor etc.)A. What is your cost function in Laredo?B.Using the demand function from Q2, calculate the profit maximizing price and quantity. Is thenew price higher or lower than the price if you do not price discriminate? Is this consistent withyour answer from Q3C. What are your profits in Laredo?

Given, The breakdown of sales across the two locations: You sold 960 burger meals per week at $10 and 600 meals at $13. In San Antonio: You sold 1440 meals per week at $10 and 1200 meals at $13 3.In Laredo: You sold 960 burger meals per week at $10 and 600 meals at $13. Demand function of Laredo: P = a+bQ 10 = a + 960b-----------------1 13 = a + 600b------------------2 Now, subtract equation 1 from 2: 3 = -360b b = -0.0083 Putting the value of b in equation 1: 10 = a + 960*(-0.0083) a = 17.968 Thus, the demand equation for Laredo is: P = 17.968 - 0.0083Q Now, at the optimum price 14 Quantity will be: 0.0083Q = 3.978 Q = 479.3 or 480(Approx.)In San Antonio: You sold 1440 meals per week at $10 and 1200 meals at $13 Demand function of San Antonio: P = a+bQ 10 = a + 1440b-----------------1 13 = a + 1200b------------------2 Now, subtract equation 1 from 2: 3 = -240b b = -0.0125 Putting the value of b in equation 1: 10 = a + 1440*(-0.0125) a = 18+10 a= 28 Thus, the demand equation for Laredo is: P = 28 - 0.0125Q Now, at the optimum price 14 Quantity will be: 0.0125Q = 14 Q = 1120