Phillips Industries manufactures a certain product that can be sold directly to retail outlets or to the Superior Company for further processing and eventual sale as a completely different product. The demand function for each of these markets is Retail Outlets: P₁ = 120-Q₁ where P₁ and P₂ are the prices charged and Q₁ and Q2 are the quantities sold in the respective markets. Phillips' total cost function for the manufacture of this product is TC= 10+8(Q1 + Q2) What is Phillips' total profit function? Superior Company: P₂ = 40 - Q2 O 112Q₁-Q₁² +32Q2-Q₂²-10 119Q1-Q₁² +30Q2 - Q₂² - 10 O 112Q₁-Q₁² +32Q2 - Q2² O 120Q1-Q₁² +40Q2 - Q₂² - 10 The profit-maximizing levels of price and output for the retail outlets market are The profit-maximizing levels of price and output for the Superior company are At these levels of output, the marginal revenue in the retail outlets market is $ per unit and per unit and units respectively. What are the total profits if Phillips is effectively able to charge different prices in the two markets? units respectively. and the marginal revenue in the Superior Company market i If Phillips is required by law to charge the same per unit in each market, the profit-maximizing level of price and output are per unit and
Phillips Industries manufactures a certain product that can be sold directly to retail outlets or to the Superior Company for further processing and eventual sale as a completely different product. The demand function for each of these markets is Retail Outlets: P₁ = 120-Q₁ where P₁ and P₂ are the prices charged and Q₁ and Q2 are the quantities sold in the respective markets. Phillips' total cost function for the manufacture of this product is TC= 10+8(Q1 + Q2) What is Phillips' total profit function? Superior Company: P₂ = 40 - Q2 O 112Q₁-Q₁² +32Q2-Q₂²-10 119Q1-Q₁² +30Q2 - Q₂² - 10 O 112Q₁-Q₁² +32Q2 - Q2² O 120Q1-Q₁² +40Q2 - Q₂² - 10 The profit-maximizing levels of price and output for the retail outlets market are The profit-maximizing levels of price and output for the Superior company are At these levels of output, the marginal revenue in the retail outlets market is $ per unit and per unit and units respectively. What are the total profits if Phillips is effectively able to charge different prices in the two markets? units respectively. and the marginal revenue in the Superior Company market i If Phillips is required by law to charge the same per unit in each market, the profit-maximizing level of price and output are per unit and
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Phillips Industries manufactures a certain product that can be sold directly to retail outlets or to the Superior Company for further processing and
eventual sale as a completely different product. The demand function for each of these markets is
Retail Outlets: P₁ = 120 - Q₁
where P₁ and P2 are the prices charged and Q₁ and Q₂ are the quantities sold in the respective markets. Phillips' total cost function for the
manufacture of this product is
TC
=
10+8(Q1+Q2)
What is Phillips' total profit function?
2
O 112Q1 - Q₁² +32Q2 — Q₂² - 10
2
Q₁² +30Q2 Q₂² – 10
O 119Q1
O 112Q₁-Q₁² +32Q2 − Q2²
O 120Q1
Superior Company: P₂ = 40 - Q2
2
- Q₁² + 40Q2 - Q₂² - 10
The profit-maximizing levels of price and output for the retail outlets market are $
The profit-maximizing levels of price and output for the Superior company are $
At these levels of output, the marginal revenue in the retail outlets market is $
$
per unit and
per unit and
units respectively.
What are the total profits if Phillips is effectively able to charge different prices in the two markets? $
units respectively.
and the marginal revenue in the Superior Company market is
If Phillips is required by law to charge the same per unit in each market, the profit-maximizing level of price and output are $
units, respectively. Total profits in this condition are $
per unit and
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