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AmonopolysellsitsproductinboththeU.S.andJapanese markets. The American inverse
demand function is PUS = 100 – QUS, and the Japanese inverse demand function is PJ = 80 – QJ. PUS and PJ are both measured in dollars. The firm’s marginal cost is MC = 20 in both countries. Suppose the company can prevent resales between these two countries.In order to maximize its profit, what prices should the
monopoly firm charge in the two markets?
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- Consider an imperfectly competitive service provider, Muscat Automotive Repair Services (MARS), whose total cost of production is C = 30Q +0. 165Q2. Also, MARS faces two different market segments, A and B, whose demands can be linearly expressed as QA = 240 − PA and QB = 120 − 0.5PB . (Hint: the marginal cost is the slope of the total cost function). 4. If MARS decides to segment the market in accordance with the demands of groups A and B, find the profit-maximizing prices and quantities (PA, QA) and (PB, QB).5. What is the value of the consumer surplus for each group A and B, under this segmentation strategy?6. Draw the situation described in (4) and (5) above, clearly showing each group’s profitmaximizing price and quantity, and the areas that correspond to their consumer surpluses.7. Verify the inverse elasticity rule under each of the scenarios described (1) and (4) above.Road Runner Co is a Pakistani manufacturer making Bicycles. It exports to two markets, Bangladesh and Sri Lanka. Demand for Bicycles in these two markets is given by the following Functions: Bangladesh Q1 = 12 – P1 Sri Lanka Q2 = 8 – P2 Where Q1 and Q2 are respective quantities sold (in thousands) andP1 and P2 are the respective prices (in Pak. Rupees per unit) in the two markets. Total cost function is C = 5 + 2 (Q1+ Q2) Now consider two cases: (i) Company is effectively able to price discriminate in the two markets. What will be the total profits? (ii) Suppose the company does not engage in price discrimination. By charging the same price in the two markets what are the profit maximizing levels of price, output, and the total profits? Analyze, with graphs, the two alternative pricing…Road Runner Co is a Pakistani manufacturer making Bicycles. It exports to two markets,Bangladesh and Sri Lanka. Demand for Bicycles in thesetwo markets is given by the following Functions: Bangladesh Q1 = 12 – P1 Sri Lanka Q2 = 8 – P2 Where Q1 and Q2 are respective quantities sold (in thousands) andP1 and P2 are the respective prices (in Pak. Rupees per unit) in the two markets. Total cost function is C = 5 + 2 (Q1+ Q2) b. consider two cases: (i) Company is effectively able to price discriminate in thetwo markets. What will be the total profits? (ii) Suppose the company does not engage in price discrimination. By charging thesameprice in the two markets what are the profit maximizing levels of price,output, and the total profits? c. Analyze, with graphs, the two alternative pricing strategies available to the company.
- Consider an imperfectly competitive service provider, Muscat Automotive Repair Services (MARS), whose total cost of production is C = 30Q+0.165Q2. Also, MARS faces two different market segments, A and B, whose demands can be linearly expressed as QA = 240 - PA and QB = 120 - 0. 5PB. (Hint: the marginal cost is the slope of the total cost function).1. Under a single-price strategy (no market segmentation), find MARS’s profit-maximizing price and quantity.Answer b and c Road Runner Co is a Pakistani manufacturer making Bicycles. It exports to two markets,Bangladesh and Sri Lanka. Demand for Bicycles in thesetwo markets is given by the following Functions: Bangladesh Q1 = 12 – P1 Sri Lanka Q2 = 8 – P2 Where Q1 and Q2 are respective quantities sold (in thousands) andP1 and P2 are the respective prices (in Pak. Rupees per unit) in the two markets. Total cost function is C = 5 + 2 (Q1+ Q2) a. Determine the company’s total profit function. Also, (i) What are the profit maximizing levels of price and output for the two markets? (ii) Calculate the marginal revenues in each market. b. Now consider two cases: (i) Company is effectively able to price discriminate in thetwo markets. What will be the total profits? (ii) Suppose the company does not engage in price discrimination. By charging thesameprice in the two markets what are the profit maximizing levels of price,output, and the total profits? c. Analyze,…Suppose that the market demand curve of food delivery service in city A is given by P = 100 − Q, where P is the price and Q is the quantity. Currently there is only one firm. The incumbent’s cost function is given by TC = 40q, where q is the quantity provided by the incumbent. Suppose that there’s a potential entrant with cost function TC = 40qe + 100, where qe is the quantity provided by the entrant. The 100 is the sunk cost for developing the delivery system that is paid upon entering the market. a. If the entrant observes the incumbent providing qi units of service and expects this level to be maintained, what output will the entrant produce? b. At what price will the incumbent sell this output to keep the entrant out of the market?
- Road Runner Co is a Pakistani manufacturer making Bicycles. It exports to two markets, Bangladesh and Sri Lanka. Demand for Bicycles in these two markets is given by the following Functions: Bangladesh Q1 = 12 – P1 Sri Lanka Q2 = 8 – P2 Where Q1 and Q2 are respective quantities sold (in thousands) andP1 and P2 are the respective prices (in Pak. Rupees per unit) in the two markets. Total cost function is C = 5 + 2 (Q1+ Q2) Determine the company’s total profit function. Also, (i) What are the profit maximizing levels of price and output for the two markets? (ii) Calculate the marginal revenues in each market. Now consider two cases: (i) Company is effectively able to price discriminate in the two markets. What will be the total profits? (ii) Suppose the company does not engage in price discrimination. By charging the same price in the two markets what are the profit maximizing levels of price, output, and the total profits?…Road Runner Co is a Pakistani manufacturer making Bicycles. It exports to two markets,Bangladesh and Sri Lanka. Demand for Bicycles in thesetwo markets is given by the following Functions: Bangladesh Q1 = 12 – P1 Sri Lanka Q2 = 8 – P2 Where Q1 and Q2 are respective quantities sold (in thousands) andP1 and P2 are the respective prices (in Pak. Rupees per unit) in the two markets. Total cost function is C = 5 + 2 (Q1+ Q2) (i) Company is effectively able to price discriminate in the two markets. What will be the total profits? (ii) Suppose the company does not engage in price discrimination. By charging the same price in the two markets what are the profit maximizing levels of price, output, and the total profits? (iii) Analyze, with graphs, the two alternative pricing strategies available to the company.Suppose the own price elasticity of market demand for retail gasoline is −0.8, the Rothschild index is 0.5, and a typical gasoline retailer enjoys sales of $1.5 million annually. What is the price elasticity of demand for a representative gasoline retailer’s product?
- Exercise 4.5 Roger is a regular consumer of personalized greeting cards with Hofmann photographs. Its demand curve is given by qd = 31 - 0.5P. Rogelio is a representative consumer of this type of cards so we can assume that the rest of the customers, 1,000 in total, have the same demand curve. The supplier company, Hofmann, can produce each card at a constant average and marginal cost of €2. In the market of personalized greeting cards there are many other companies that offer very similar cards. Consider the following 4 scenarios: (i) Hofmann acts as a perfect competitor. ii) Hofmann acts as a monopolist. iii) Hofmann acts as a first-degree discriminator monopolist iv) Hofmann acts as a second-degree discriminator monopolist and offers each of its customers the possibility to buy the first 15 cards at a unit price of € 32, the next 5 (from € 16 to 20) at a unit price of € 22 and the following 10 (from € 21 to 30) at a unit price of €2. Calculate, for the 4 scenarios proposed, the…a) Given the marginal cost of a firm is MC = 8q^2 +10q +12 and MR = 50- q. Given that total cost TC = 3350 when q=10. derive expressions for both total cost and total revenue. b) given the function f(x) = (x+4)^2 + (y-2)^2 (i)find the critical points (ii)using the second derivative test, classify the critical points.Consider a duopoly with a leader (called L) and a follower (called F). The market demand is given as: P=500-0.25Q, where Q=QL+QF The total cost function for the leader is given as: TCL=0.03QL The total cost function for the follower is given as: TCF=0.1QF All variables are per day, per plant. What is the profit-maximizing quantity for the leader (per day, per plant)? (Note: Round your answer to two decimal points