Suppose that BMW can produce any quantity of cars at a constant marginal cost equal to $20,000 and a fixed cost of $10 billion. You are asked to advise the CEO as to what prices and quantities BMW should set for sales in Europe and in the United States. The demand for BMWs in the U.S. is given by Qu = 1, 000, 000 – 20P. The demand for BMWs in Europe is given by QE 4,000,000 - 100PE. All prices and costs are in U.S. dollars. Assume that the company can preven resale between the two markets. =

Suppose that BMW can produce any quantity of cars at a constant marginal cost equal to $20,000 and a fixed cost of $10 billion. You are asked to advise the CEO as to what prices and quantities BMW should set for sales in Europe and in the United States. The demand for BMWs in the U.S. is given by Qu = 1, 000, 000 – 20P. The demand for BMWs in Europe is given by QE 4,000,000 - 100PE. All prices and costs are in U.S. dollars. Assume that the company can preven resale between the two markets. =

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

The following graph shows the supply of (orange curve) and demand for (blue curve) satellite navigation devices.
In recent years fresh bagel sales have been growing at about 30% per year. Once considered an ethnic food to be eaten only by some consumers, bagels now “have become the new doughnut to bring to the office.” But one problem with bagels is that they get stale fast. In the words of Ray Lahvic, editor emeritus of Bakery Production and Marketing, “The worst thing in the world is a day-old bagel.” If a market researcher asserts that the slope of the typical consumer’s indifference curve between fresh bagels and day-old bagels is -1, would you agree with Mr. Lahvic’s statement about fresh and day-old bagels given above? Please explain. Note: Slope of the indifference curve is the marginal rate of substitution (MRS) and the MRS is defined as “How much of good A will a consumer give up to get one more unit of good B such that the total utility before and after the change in consumption of A and B is the same.”
Consider the business whose Total Cost and Total Revenue for various quantities of a particular product are shown in the table below. Quantity Total Cost Total Revenue 0 100 0 1 250 500 2 350 950 3 500 1350 4 725 1700 5 1000 2000 6 1400 2250 Use the Profit-Maximizing Rule to explain the quantity that this business should produce to maximize its profits. Answer must both state the number to produce and an explanation of how you used the profit-maximizing rule to arrive at that number.
Consider the competitive market for steel. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. V AVC COSTS (Dollars per ton) 100 882 889 80 20 0 MC 5 25 30 35 QUANTITY (Thousands of tons) 15 20 10 45 40 50 The following diagram shows the market demand for steel.
Suppose that Nike's Fortnite concert led to a huge spike in economic profit. Why is it likely that this profit would be temporary?
Tom, a math major, examines Jane's economics class notes and observes that when price-taking firms earn economic profit, they do not seem to produce a quantity that minimizes theircosts. Is he correct?Is there significance to this observation?
Suppose that the market for dress shirts is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. 50 18, 42 45 40 35 30 ATC 25 20 15 AVC 10 MC 2 4 6 8 10 12 14 16 18 20 QUANTITY (Thousands of shirts) For each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that quantity, using the data from the graph to identify its total variable cost. Assume that if the firm is indifferent between producing and shutting down, it will produce. (Hint: You can select the purple points [diamond symbols] on the graph to see precise information on average variable cost.) Price Quantity Total Revenue Fixed Cost Variable Cost Profit (Dollars per shirt) (Shirts) (Dollars) (Dollars) (Dollars) (Dollars) 12.50 7,500 135,000 27.50 135,000 45.00 135,000 If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is…
The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a purely competitive firm that produces novelty ear buds. Assume the market for novelty ear buds is a competitive market and that the price of ear buds is $6.00 per pair. Buddies Production Costs Quantity MC ATC of Ear Buds ($) ($) 20 1.00 25 2.00 1.20 30 2.46 1.41 35 3.51 1.71 40 4.11 2.01 45 5.43 2.39 50 5.99 2.75 55 8.47 3.27 Instructions: In part a, enter your answer as the closest given whole number. In parts b-d, round your answers to two decimal places. a. If Buddies wants to maximize profits, how many pairs of ear buds should it produce each week? pairs b. At the profit-maximizing quantity, what is the total cost of producing ear buds? 2$ c. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what will Buddies profit or loss be per week? 2$
need help
On the graph input tool, change the number found in the Quantity Demanded field to determine the prices that correspond to the production of 0, 6, 12, 15, 18, 24, and 30 units of output. Calculate the total revenue for each of these production levels. Then, on the following graph, use the green points (triangle symbol) to plot the results. Calculate the total revenue if the firm produces 6 versus 5 units. Then, calculate the marginal revenue of the sixth unit produced. The marginal revenue of the sixth unit produced is________. Calculate the total revenue if the firm produces 12 versus 11 units. Then, calculate the marginal revenue of the 12th unit produced. The marginal revenue of the 12th unit produced is_________.
7. Short-run supply and long-run equilibrium Consider the competitive market for copper. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. COSTS (Dollars per pound) 80 72 64 56 48 40 32 24 16 8 0 0 MC ATC AVC 4 8 12 16 20 24 QUANTITY (Thousands of pounds) 0 n 28 32 U 36 40 (?)
Suppose that the market for microwave ovens is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. PRICE (Dollars per oven) 100 90 80 70 40 30 20 10 0 0 5 0 MC ATC AVC 10 15 20 25 30 35 QUANTITY (Thousands of ovens) 40 45 50 (?)