Assume that resale between countries is not possible and that MiniChirp is a profit maximiser. (a) Find the prices, pA and PNZ, which maximise MiniChirp's profits, assuming no capacity constraints. (b) Suppose that MiniChirp faces a capacity constraint of 250 units: (QA+QNZ ≤ 250). What price that MiniChirp will charge in each country? (c) Suppose that MiniChirp faces a capacity constraint of 125 units: (QA + QNZ ≤ 125). What price that MiniChirp will charge in each country? (d) Suppose that MiniChirp faces a capacity constraint of 20 units: (QA+QNZ ≤ 20). What is the lowest price that MiniChirp will charge in each country?

Assume that resale between countries is not possible and that MiniChirp is a profit maximiser. (a) Find the prices, pA and PNZ, which maximise MiniChirp's profits, assuming no capacity constraints. (b) Suppose that MiniChirp faces a capacity constraint of 250 units: (QA+QNZ ≤ 250). What price that MiniChirp will charge in each country? (c) Suppose that MiniChirp faces a capacity constraint of 125 units: (QA + QNZ ≤ 125). What price that MiniChirp will charge in each country? (d) Suppose that MiniChirp faces a capacity constraint of 20 units: (QA+QNZ ≤ 20). What is the lowest price that MiniChirp will charge in each country?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Problem 3
=
Suppose that a MiniChirp is a monopoly microchip manufacturer who faces the following demand
curves for its product in two different countries: Australia (A) and New Zealand (NZ). Australia: QA
400 - PA, New Zealand: QNz = 150 - PNZ, where p; and Q, denote the price and quantity sold in country
i respectively. MiniChirp's cost function is given by
c(Q) = 0.25(QA + QNZ)².
Assume that resale between countries is not possible and that MiniChirp is a profit maximiser.
(a) Find the prices, PA and PNZ, which maximise MiniChirp's profits, assuming no capacity constraints.
(b) Suppose that MiniChirp faces a capacity constraint of 250 units: (QA+QNz ≤ 250). What price
that MiniChirp will charge in each country?
(c) Suppose that MiniChirp faces a capacity constraint of 125 units: (QA+QNz ≤ 125). What price
that MiniChirp will charge in each country?
(d) Suppose that MiniChirp faces a capacity constraint of 20 units: (QA+QNz ≤ 20). What is the
lowest price that MiniChirp will charge in each country?

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