A small town has two bakeries, Acme and Fat Apple. Acme's marginal cost to make loaf of bread is $1 and Fat Apple's marginal cost is $2. Acme's demand function is given as Q₁ = 14 - P₁ -0.5P2 and Fat Apple's demand function is Q2 = 19 -0.5P1 - P2 where P₁ (P2) is Acme (Fat Apple)'s price in dollars per loaf of break and Q₁ (Q2) is measured in thousand loaves of Amce (FatApple)'s bread (respectively). Find best response functions.P₁ = 7.5 -0.25P2 and P2 = 10.5 -0.25P₁.OP₁ = 7.5 -0.25P2 and P2 = 10.5 -0.5P₁.OP₁ = 7.5 -0.5P2 and P2 = 10.5 -0.5P1.P₁ = 10.5 -0.25P2 and P2 = 10.5 -0.25P₁.

A small town has two bakeries, Acme and Fat Apple. Acme's marginal cost to make a loaf of bread is $1 and Fat Apple's marginal cost is $2. Acme's demand function is given as Q₁ = 14 - P₁ - 0.5P2 and Fat Apple's demand function is Q2 = 19-0.5P1 P2 where P1 (P2) is Acme (Fat Apple)'s price in dollars per loaf of break and Q1₁ (Q2) is measured in thousand loaves of Amce (Fat Apple)'s bread (respectively). Find best response functions. P₁ = 7.5 -0.25P2 and P2 = 10.5 -0.25P1. O P₁ = 7.5 -0.25P2 and P2 = 10.5 -0.5P₁. O P₁ = 7.5 -0.5P2 and P2 = 10.5 -0.5P1. O P₁ = 10.5 -0.25P2 and P2 = 10.5 -0.25P₁.

A small town has two bakeries, Acme and Fat Apple. Acme's marginal cost to make a loaf of bread is $1 and Fat Apple's marginal cost is $2. Acme's demand function is given as Q₁ = 14 - P₁ - 0.5P2 and Fat Apple's demand function is Q2 = 19-0.5P1 P2 where P1 (P2) is Acme (Fat Apple)'s price in dollars per loaf of break and Q1₁ (Q2) is measured in thousand loaves of Amce (Fat Apple)'s bread (respectively). Find best response functions. P₁ = 7.5 -0.25P2 and P2 = 10.5 -0.25P1. O P₁ = 7.5 -0.25P2 and P2 = 10.5 -0.5P₁. O P₁ = 7.5 -0.5P2 and P2 = 10.5 -0.5P1. O P₁ = 10.5 -0.25P2 and P2 = 10.5 -0.25P₁.

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

Widget Sales Jesaki Inc. is trying to enter the widget market. The research department established the following price-demand, cost, and revenue functions: p(x)=60-1.20x C(a) = 210 + 12x |R(x) = xp(x) = x(60 - 1.20x) Revenue function where x is in thousands of widgets and C(x) and R(x) are in thousands of dollars. The price p(z) is the price in dollars of one widget when the demand is a thousand widgets. All three functions have domain 1 ≤ ≤ 50. Use this information to answer questions 1-10 below. Price-demand function Cost function
Suppose a firm engaged in the illegal copying of DVD’s has a daily short run total cost function given by: STC = (q^2)+25 If pirated DVD’s sell for $20, how many will the firm copy each day? What will its profits be? What is the firm’s short run producer surplus at P=20? Develop a general expression for this firm’s producer surplus as a function of the price of pirated DVD’s.
Consider the market for tilapia. Ripple Rock Fish Farms, a small family fishery in Ohio, and The Fishin’ Company, a large corporate supplier, are both producers of tilapia. The marginal cost curves for both firms are shown in the accompanying graph. a. Suppose the market price of tilapia is $2.50 per pound. Move point A to Ripple Rock’s quantity sold. Move point B to The Fishin’ Company’s quantity sold. b. How many pounds of tilapia do they collectively supply?________thousand pounds c. To achieve efficient production, The Fishin’ Company should supply _____ ("more", or "less", or "the same") it is currently producing, and Ripple Rock should supply __________ ("more", or "less", or "the same") it is currently producing.
Consider the following problem: Demand: q = 100-p Retailer: marginal cost of selling r = 10 per unit Manufacturer: marginal cost of producing = 40 per unit Neither firm faces any competitor Suppose now that the retailer and the manufacturer are separate firms. Write down the profit function of the manufacturer if it sells to the retailer at w. You solved for the quantity the manufacturer will sell a minute ago, so you can use that in the profit function, and then you will have a profit function for the manufacturer that does not have p, but only has w in it. Solve for the optimal w for the manufacturer to charge and calculate the quantitysold under that w.
Suppose that a technological innovation decreases BYOB's costs so that it now faces the marginal cost (MC) and average cost (AC) given on the following graph. Specifically, the technological innovation causes a decrease in average fixed costs, thereby lowering the AC curve and moving the MC curve. Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and quantity for BYOB. If BYOB is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. On the other hand, if BYOB is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing the loss. PRICE (Dollars per unit) 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0 0 MC 0.5 MR AC 1.0 1.5 2.0 2.5 3.0 QUANTITY (Thousands of cans of beer) 3.5 D 4.0 Monopoly Outcome Profit Loss ?
Imagine that the cell-phone market is made up of one large firm that leads the industry and sets its own price first, while smaller firms in the industry follow. There are 20 such smaller firms, each with a supply function of q; = 67.50 + for i = 1,2, ..., 20 firms, while pis the per-unit price. Total market demand for cell phones is given by the function Q = 6, 700.00 – p. If the cost function for the leading firm is CL(qL) = 109L, calculate the following values: %3D Leading firm's production: q1 = (Round to two decimals if necessary.) Total follower firm production: qF = (Round to two decimals if necessary.) Equilibrium price: p = $ (Round to two decimals if necessary.)
An industrial firm makes two products, A and B. These products require water resources where they are very scarce. The products they make are unique, and hence they can set the unit price of each product at any value they want to. However, experience tells them that the higher the unit price for a product, the less amount of that product they will sell. The relationship between the unit price and quantity that can be sold is given by the following two demand functions: Assume for simplicity that the unit price for product A is (16 - A) and for product B is (18-2.5B). Suppose the total amount of A and B could not exceed the total amount of Tmax. Where Tmax = 10. Please use "Lagrange Multiplier" method to determine what are the amounts of A and B, and their unit prices, that maximize total revenue (Set the marginal increments at 1).
2. A firm has a cost function of C = 1000+20Q + 1/10Q2 and has a demand function as shown in the graph below: 100 90 80 70 70 60 60 50 40 30 20 10 0 10 20 30 40 50 60 70 80 90 100 Quantity (Q) -P (demand) a) Estimate the firm's demand function. You may assume that the slope is a whole number, and the intercept is a multiple of 10. (1 mark) b) Find the firm's revenue function. You do not need to draw it. (2 marks) c) Find the marginal revenue function, and draw it on a copy of the graph. (3 marks) d) Find and draw the marginal cost function. (3 marks) e) Use your results from parts (c) and (d) to find the profit-maximising level of output. (3 marks) f) Find the market price at this level of output. (2 marks)
Problem 3 A furniture maker builds and sells wooden benches. The demand function for the benches is given by the function p = 1600 -x where p is the price per bench and x is the number of benches sold. The furniture maker also knows that the fixed costs for the business are $20,000 and each bench costs $75 to make. Part a) Create a function that represents revenue as a function of the number of benches produced and create a function that represents the cost as a function of the number of benches produced. Make sure to label your input and output variables. Part b) How many benches should be produced and sold in order to maximize revenue? What price should the furniture maker sell them? (Make sure to show your work) Part c) How many benches should be produced and sold in order to maximize profit? What is the maximum profit? (Make sure to show your work)
Let's say there is demand in a market. The unit cost of production of the good is fixed and is at level 3. If you had a technology that could reduce this cost to 1, how much would you sell the pantent of the technology you have? (Hint: How much does society spend to get the technology you have?)
An industry has the following cost function: C(X, Y ) = 1500+20X +20Y . Market demands for the 2 goods are given by PX =80−X, and PY =140−2Y Suppose the government wished to use two part tariffs in these markets, and suppose further that two part tariffs are feasible. Imagine that there are 10 consumer in each market. Solve for a set of two part tariffs (one for each martket) that pay the firm zero profits in total, yet achieves efficiency.
Window cleaning is a perfectly competitive market in Boston. The daily market demand for window cleaning in Boston is Q(P) = 360 ‒ 4P, where Q represents the daily number of houses served and P is the price per house; and (2) the current market price per house served is 30. Each window-cleaning firm faces a daily total cost of TC(q) 72+ 1/2 q2, where q represents the number of houses served per day. What is the current daily profit for each window-cleaning firm? A. -72 B. 0 C. 378 D. 400 E. 578