A firm produces two different goods, with demand given by the following: Pa = 100 –...
A firm produces two different goods, with demand given by the following:
Pa = 100 – 3Qa + 2Qb and Pb = 105 – 8Qb Where Pa = price of good A, Pb = price of good B, Qa = quantity of good A and Qb = quantity of good B. The marginal costs for the two goods are 12 for good A and 15 for good B.
Determine optimal prices and quantities for each good.
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A firm produces two different goods, with demand given by the
following:
Pa = 100 –...
Bonus (5 points) True or False: Consider a monopolist which produces two interrelated goods A and B with QA(PA, PB) and QB(PA, Pa) where Q is the demand and P is the price. If dA-0, the firm could ch...
Bonus (5 points) True or False: Consider a monopolist which produces two interrelated goods A and B with QA(PA, PB) and QB(PA, Pa) where Q is the demand and P is the price. If dA-0, the firm could charge the same price as a monopolist in market A which produces only good A. Explain your answer. (Answers without correct explanation will receive 0 credit.)
Bonus (5 points) True or False: Consider a monopolist which produces two interrelated goods A and...
Anna’s demand for peaches is given by PA = 200 – 3QA, where QA is the quantity (kilograms) demanded at price PA($/kilo)...
Anna’s demand for peaches is given by PA = 200 – 3QA, where QA is the quantity (kilograms) demanded at price PA($/kilo). Basil’s demand is given by PB = 120 – 2QB, where QB is the quantity (kilograms) demanded at price PB ($/kilo). Each of the two has $2,000 that they can spend if they want to buy something. Suppose the endowments are as follows: Anna has 110 kilograms of peaches, Basil has none. When they trade, who will sell...
A firm's market demand for its product in the company’s country, a, is given by Qa(Pa)...
A firm's market demand for its product in the company’s country, a, is given by Qa(Pa) = 1,050 − 4Pa, where Qa is the quantity of products produced per year and Pa is the price product. Cost of producing this product is ?(Q) = 70,125 + 0.0125Q2. This implies a marginal cost of production of ?C(q) = 0.025Q. a) Find the profit-maximizing price and quantity. Compute the firm’s profit in this case. Should the firm shut down in the short...
A) Suppose a monopoly sells to two identifiably different types of customers, A and B, who...
A) Suppose a monopoly sells to two identifiably different types of customers, A and B, who are unable to practice arbitrage. The inverse demand curve for group A is PA = 29 - QA, and the inverse demand curve for group B is PB = 19 - 2QB. The monopolist is able to produce the good for either type of customer at a constant marginal cost of 3, and the monopolist has no fixed costs. If the monopolist practices group...
22. Suppose a monopoly sells to two identifiably different types of customers, A and B, who...
22. Suppose a monopoly sells to two identifiably different types of customers, A and B, who are unable to practice arbitrage. The inverse demand curve for group A is PA 20-QA, and the inverse demand curve for group B is PB 20-2QB. The monopolist is able to produce the good for either type of customer at a constant marginal cost of 4, and the monopolist has no fixed costs. If the monopolist practices group price discrimination, what are the profit...
A firm produces two goods (the quantities of the two goods are denoted, Q1 and Q2). The demand fu...
A firm produces two goods (the quantities of the two goods are denoted, Q1 and Q2). The demand functions are Pi = 50-0.0075Q1 and P.-40-0.004Q2. Total cost is given by TC 19,800 + 20Q1 + 2002, Marginal costs are constant, so pricing at marginal costs results in a loss of the fixed costs for the firm. To eliminate this loss, prices must be raised. The regulator is considering three different possible sets of prices: Set 1: P121 and P2 23.98...
In Little Town, there are two suppliers of mineral water: A and B. Mineral water is...
In Little Town, there are two suppliers of mineral water: A and B. Mineral water is considered a homogenous good. Let pA and pB denote the price and qA and qB the quantity sold by firms A and B, respectively. Suppose that the municipality provides all the water for free, so firms don't bear any production cost. The inverse demand function for mineral water is given by P=12-1/3Q where Q=qA + qB denotes the aggregate supply of mineral water. Suppose...
Section B. Short Answer Question (2 questions, 20 points each) Question 1 (20 pts) The following...
Section B. Short Answer Question (2 questions, 20 points each) Question 1 (20 pts) The following data pertain to products A and B, both of which are purchased by Emily. Emily has $105 to spend per time period. Initially, the prices of the products are PA $5, PB $10. And Emily's optimal consumption bundle is O1 {QA = 5, QB- 8}. 1.1) What is Emily's marginal rate of substitution when she consumes the bundle O1, i.e., ΔΑ MUB MRS MUA...
Two airlines compete for passengers on a one-way flight Philadelphia Orlando, FL. They differentiate their products primarily on product quality, with Firm A providing more upscale service, while Fir...
Two airlines compete for passengers on a one-way flight Philadelphia Orlando, FL. They differentiate their products primarily on product quality, with Firm A providing more upscale service, while Firm B operates more as an economy airline. The demand curve for Firm A's product (upscale service) is: Qa- 720-2Pa PB, Firm B has a product (economy service) demand curve equal to: QB-528-3Ps + 2PA The marginal cost for firm A is $70 per passenger, for firm B it is $40 per...
A firm sells its product in two different markets. The inverse demand in market A is...
A firm sells its product in two different markets. The inverse demand in market A is PA= 72 - 5QAand in market B, it is PB= 60 - 3QB. It has fixed costs of 72. Each unit it produces costs 12, i.e., marginal cost equals 12. To maximize profits, what quantities of output will be sold in each market and what will total profits be?(Show your work). ____________ ___________ _____________ in Market A in Market B total profits
Bonus (5 points) True or False: Consider a monopolist which produces two interrelated goods A and B with QA(PA, PB) and QB(PA, Pa) where Q is the demand and P is the price. If dA-0, the firm could charge the same price as a monopolist in market A which produces only good A. Explain your answer. (Answers without correct explanation will receive 0 credit.)
Bonus (5 points) True or False: Consider a monopolist which produces two interrelated goods A and...
22. Suppose a monopoly sells to two identifiably different types of customers, A and B, who are unable to practice arbitrage. The inverse demand curve for group A is PA 20-QA, and the inverse demand curve for group B is PB 20-2QB. The monopolist is able to produce the good for either type of customer at a constant marginal cost of 4, and the monopolist has no fixed costs. If the monopolist practices group price discrimination, what are the profit...
A firm produces two goods (the quantities of the two goods are denoted, Q1 and Q2). The demand functions are Pi = 50-0.0075Q1 and P.-40-0.004Q2. Total cost is given by TC 19,800 + 20Q1 + 2002, Marginal costs are constant, so pricing at marginal costs results in a loss of the fixed costs for the firm. To eliminate this loss, prices must be raised. The regulator is considering three different possible sets of prices: Set 1: P121 and P2 23.98...
Section B. Short Answer Question (2 questions, 20 points each) Question 1 (20 pts) The following data pertain to products A and B, both of which are purchased by Emily. Emily has $105 to spend per time period. Initially, the prices of the products are PA $5, PB $10. And Emily's optimal consumption bundle is O1 {QA = 5, QB- 8}. 1.1) What is Emily's marginal rate of substitution when she consumes the bundle O1, i.e., ΔΑ MUB MRS MUA...
Two airlines compete for passengers on a one-way flight Philadelphia Orlando, FL. They differentiate their products primarily on product quality, with Firm A providing more upscale service, while Firm B operates more as an economy airline. The demand curve for Firm A's product (upscale service) is: Qa- 720-2Pa PB, Firm B has a product (economy service) demand curve equal to: QB-528-3Ps + 2PA The marginal cost for firm A is $70 per passenger, for firm B it is $40 per...
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