3. A firm is selling two versions of a product: for one demand is estimated to...
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 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.
Assume a first estimate their price elasticity of demand (EQxPx) to be -3.5, and their marginal cost to be $15. 3. Assume a firm estimate their price elasticity of demand (EQxPx) to be -3.5, and their marginal cost to be $15. a. Using the mark-up rule, what is the optimal price for the firm to charge? 2 points b. Confirm that your answer above is correct, by computing the profit maximizing quantity and price using MR = MC if the...
Determine the profit-maximizing prices when a firm faces two markets where the inverse demand curves are Market A: Pa=80-2Qa where demand is less elastic, and Market B: Pb=60-1Qb where demand is more elastic, and Marginal Cost = m=40 for both markets. For Market A Pa= $___ For Market B Pb = $___
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...
Let us assume that there are two visitors, A and B, in an amusement park. The demand curve for the visitors facing the amusement park are as follows. PA= 5 – 2QA PB= 2.5 – 0.5QB Marginal cost (MC) to serve each visitor is equal to $1. Solve for PA, PB, QA and QB assuming MR=MC. Calculate price elasticities of demand using Mark-up pricing formula. [Hint: use PA, PB and MC to solve for elasticities for visitor A (eA) and...
Part 2 A firm specializes in the production of a certain product X. The demand for its new brand of product X is given by: Q = 1,000 - 4Px. Assume that you are the manager of the firm and you must determine the best price to charge for the good. The marginal cost of producing product X is zero. 1. Determine the inverse demand equation of product X. 2. Determine the marginal revenue as function of the quantity demanded...
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
1. Jaime owns a monopoly business selling sweatshirts. The demand for her product is given by: Q = 2000 ‒ 15P. She is currently selling sweatshirts at P = $80. What is the price elasticity of demand when the price is P = $55? You will have to use the point elasticity formula. The price elasticity of demand at this price is ___________ A: -0.7 2. Consider your answer to the previous question. If Jaime wants to increase the revenue...
A monopoly is considering selling several units of a homogeneous product as a single package. A typical consumer’s demand for the product is Qd = 40 - 0.5P, and the marginal cost of production is $50. a. Determine the optimal number of units to put in a package. _____ units b. How much should the firm charge for this package? $_____