MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
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Chapter 15, Problem 6QE
To determine
Identify the market structure that best characterizes the market for breakfast cereals.
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Pizza Hut and Domino's are the leading pizza chains in terms of market share. If the price of Domino's rises significantly, all else equal, what impact will that have on Pizza Hut?
Pizza Hut's demand will shift left
Pizza Hut's demand will shift right
Pizza Hut's supply will shift left
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Mizuno Corporation produces and sells running shoes. The marketing division (the downstream
division) of Mizuno faces the following the direct market demand equation as follows:
Q = 392 – 2P,
where Q is the number of pairs of shoes and P is the price of a pair of shoes.
Production of each pair of shoes requires 1 square yard of leather. The leather is shaped and cut
by the Form division of Mizuno (the upstream division). The Form division’s only customer is
the marketing division.
The total cost function for leather is
TCU = 0.5QU2 +10 QU +2
where QU is the quantity of leather produced.
The total cost of assembling and selling shoes (excluding the leather) is
TCD = 2Q2 + 6Q + 4.
a) Write down the profit equations of downstream division, upstream division and total profits
b) Calculate the profit-maximizing quantity of shoes (Q*), quantity of leather (Qu)
and price of shoes (P*)
c) Determine the optimal transfer price (PU∗)
Mizuno Corporation produces and sells running shoes. The marketing division (the downstream division) of Mizuno faces the following the direct market demand equation as follows:Q = 392 – 2P,where Q is the number of pairs of shoes and P is the price of a pair of shoes.
Production of each pair of shoes requires 1 square yard of leather. The leather is shaped and cut by the Form division of Mizuno (the upstream division). The Form division’s only customer is the marketing division.
The total cost function for leather is
TCU=0.5Q2U+10QU+2,where QU is the quantity of leather produced.
The total cost of assembling and selling shoes (excluding the leather) isTCD = 2Q2 + 6Q + 4.
a) Write down the profit equations of downstream division (πD), upstream division (πU), and total profits (π). b) Calculate the profit-maximizing quantity of shoes (Q*), quantity of leather (Q*U ) and price of shoes (P*)c) Determine the optimal transfer price (P*U).d) Using the profit equations of your answer in a),…
Chapter 15 Solutions
MICROECONOMICS
Ch. 15.1 - Prob. 1QCh. 15.1 - Prob. 2QCh. 15.1 - Prob. 3QCh. 15.1 - Prob. 4QCh. 15.1 - Prob. 5QCh. 15.1 - Prob. 6QCh. 15.1 - Prob. 7QCh. 15.1 - Prob. 8QCh. 15.1 - Prob. 9QCh. 15.1 - Prob. 10Q
Ch. 15 - Prob. 1QECh. 15 - Prob. 2QECh. 15 - Prob. 3QECh. 15 - Prob. 4QECh. 15 - Prob. 5QECh. 15 - Prob. 6QECh. 15 - Prob. 7QECh. 15 - Prob. 8QECh. 15 - Prob. 9QECh. 15 - Prob. 10QECh. 15 - Prob. 11QECh. 15 - Prob. 12QECh. 15 - Prob. 13QECh. 15 - Prob. 14QECh. 15 - Prob. 15QECh. 15 - Prob. 16QECh. 15 - Prob. 17QECh. 15 - Prob. 18QECh. 15 - Prob. 1QAPCh. 15 - Prob. 2QAPCh. 15 - Prob. 3QAPCh. 15 - Prob. 4QAPCh. 15 - Prob. 5QAPCh. 15 - Prob. 1IPCh. 15 - Prob. 2IPCh. 15 - Prob. 3IPCh. 15 - Prob. 4IPCh. 15 - Prob. 5IPCh. 15 - Prob. 6IPCh. 15 - Prob. 7IP
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