8. Two software companies sell competing products. These products are substitutes so that the number of units that either company sells is a decreasing function of its own price and an increasing function of the other product's price. Let P1 and X1 be the price and quantity sold of product 1, and P2 and X2 the price and quantity sold of product 2. We have that X1 = 1,000 90-P1+P2) and X2 = 1,000 90P2+P1). Each company has 2 incurred a fixed cost for designing their software and writing programmes, but the cost of selling to an extra user is zero. As the firms compete in prices, each company will choose a prico +hat mavimisos its profite

8. Two software companies sell competing products. These products are substitutes so that the number of units that either company sells is a decreasing function of its own price and an increasing function of the other product's price. Let P1 and X1 be the price and quantity sold of product 1, and P2 and X2 the price and quantity sold of product 2. We have that X1 = 1,000 90-P1+P2) and X2 = 1,000 90P2+P1). Each company has 2 incurred a fixed cost for designing their software and writing programmes, but the cost of selling to an extra user is zero. As the firms compete in prices, each company will choose a prico +hat mavimisos its profite

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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10) The proprietor of the Shaw Music Mania Store calculates the demand equation for a certain brand of CDs to be q = -50p + 2000 , where p is the price it charges per disc and q is the number of discs sold in a day. Determine the maximum total annual revenue and the price at which the max revenue occurs.
3. Consider the Smith family who have the following demand for rental housing (q, measured in square feet): q=0.5*(y/p), where y is the Smith family income and p is the price of housing per square foot. The Smith's income is $4000 per month and initially the price of housing is $2 per square foot per month. a. If the Smiths are operating on their demand curve, how much housing are they consuming? b. How much is the Smith family's monthly rent? How much does the Smith family spend on other consumption? c. Starting from the initial equilibrium, the government now grants the Smiths a proportional rent subsidy with B=0.5. How much housing does the Smith family purchase given the subsidy? d. What is the gross market rent per month paid by the Smith family? What is the net rent (after deducting the subsidy) paid by the Smith family? How much does the Smith family spend on other consumption in its new equilibrium? e. What is total dollar outlay of the government for the Smith's housing…
Question #2 Consider the following demand function for frozen dinners where QD is the quantity of frozen dinners demanded per week, P is the price per frozen dinner, PF is the price per fast food meal, Y is the average yearly consumer income, and A is the number of advertisements for frozen dinners. Demand Function for Frozen Dinners: QD = 1,000 – 10P + 20PF – 0.01Y + A Suppose that a frozen dinner sells for $4, a fast food meal sells for $6, average yearly consumer income is $50,000, and that there are 20 advertisements for frozen dinners. Calculate and interpret the income elasticity of demand. Calculate and interpret the cross-price elasticity of demand with respect to fast food meals.
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1. The demand function for a certain brand of CD is given by p = -0.01x² - 0.2x + 10 where p is the unit price in dollars and x is the quantity demanded each week, measured in units of a thousand. The supply function is given by p = 0.01x² + 0.2x + 4 where p is the unit price in dollars and x stands for the quantity that will be made available in the market by the supplier, measured in units of a thousand. Determine the producers' surplus if the market price is set at the equilibrium price. (Round your answer to the nearest dollar.)
The price of a widget decreases from $5000 to $4000, and in response to the price change the quantity demanded increases from 4000 to 8000 units. Therefore, demand for widgets in this price range: (Use the midpoint formula and write your answer in absolute terms, meaning as a positive number)
2. [Own Price Elasticity of Demand] Given a demand function Q=f(P), the own price elasticity of demand is defined as P - (de). (2). ε = What is the own price elasticity of demand e (a) for the linear demand function Q = 200-3.5P when P = 10. (b) for the linear inverse demand function P= 100-3.5Q when Q = 10. (c) for the inverse demand function P=Q-35, when (i) Q = 5; (ii) Q = 10.
Nn.47. Subject :- Economy
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Johnson's Household Products has a division that produces two types of toothpaste: a regular toothpaste and a whitening tooth paste. The demand equations that relate the prices, p and q (in dollars per thousand units), to the quantities demanded weekly, x and y (in units of a thousand), of the regular toothpaste and the whitening toothpaste are given by p=3000-20 x-10 yp=3000−20x−10y and q=4000-10 x-30 yq=4000−10x−30y respectively. The fixed cost attributed to the division is $20,000/week, and the cost for producing 1000 tubes of regular and 1000 tubes of whitening toothpaste is$400 and $500, respectively. a. What is the weekly total revenue function R(x, y)? b. What is the weekly total cost function C(x, y)? c. What is the weekly profit function P(x, y)? d. How many tubes of regular and whitening toothpaste should be produced weekly to maximize the division's profit? What is the maximum weekly profit?