Question

Concept Question 3.2 Question Help The town of Perkasie, Pennsylvania, has two diners: Emil's Diner and Bobby Ray's Diner. Both sell only chicken pies. Everyone who would consider eating at the diners is aware that they sell the same chicken pies, and knows the prices they charge (PE. PER). At precisely 5 P.M., each diner (simultaneously) sets its price of chicken pie for that evening. The market demand function for chicken pie is Q = 240 - 40p, where p is the lower of the two diners' prices. If there is a lower-priced diner, then people eat chicken ple at only that diner and the diner sells 240 - 40p chicken pies. If the two diners post the same price, then each sells to one-half of the market: 0.5(240 - 40p). Suppose that prices can be quoted in dollar units only ($0, 2, 3, or 4). Each diner's marginal cost is $2 and fixed cost is $0. is Q-24h cken pies torch diner's margo If Emil's Diner charges $0 and Bobby Ray's Diner charges $3, then Emil's profit is $ and Bobby Ray's profit is $ (Enter numeric responses using integers.)

Answer 1

Since Emil's Diner is charging less price,

Quantity sold by Emil's Diner=240-40*p=240-4*0=240

Quantity sold by Bobby Ray's Diner=0

Emil's Diner Revenue=p*Q=0*240=0

Emil's Diner Cost=MC*Q+F=2*240+0=480

Profit in case of Emil's Diner=Total Revenue-Total Cost=0-480=-$480

Emil's Diners will make a loss of $480 or we can say a profit of -$480

Bobby Ray's Diner Revenue=p*Q=3*0=0

Bobby Ray's Cost=MC*Q+F=2*0+0=0

Profit in case of Bobby Ray's Diner=Total Revenue-Total Cost=0-0=0