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, with graphs, the two alternative pricing strategies available to the company.

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, with graphs, the two alternative pricing strategies available to the company.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.3P

See similar textbooks

Similar questions

Suppose the current exchange rate is 115 yen per dollar. We currently have a demand for 50 units of our product when the unit price is 800 yen. The cost of producing and shipping the product to Japan is $6, and the current elasticity of demand is –0.15625. Find the optimal price to charge for the product (in yen) for each of the following exchange rates: 60 yen/$, 80 yen/$, 100 yen/$, 120 yen/$, 140 yen/$, and 160 yen/$. Assume the demand function is linear. use the following formula for demand: Demand = 175 - 0.15625 x Price
Given the following equations: x^2-4y+4x-4=0 and 4y+7x-56=0 where x represents the quantity in thousands of units of a certain item manufactured and sold by a certain company, and y represents the unit price in hundreds of pesos. determine which is the demand curve a. 4y+7x-56=0 b. x^2-4y+4x-4=0
Volkswagen’s reputation among car buyers was shattered when the public discovered it was cheating on its emissions checks. What happened to equilibrium prices and quantities in the market for Audis, which is widely known to be a good substitute for Volkswagens also created in Germany? The equilibrium price Group of answer choices is ambiguous and the equilibrium quantity increases. increases and the equilibrium quantity increases. decreases and the equilibrium quantity increases. increases and the equilibrium quantity decreases.
Assume that the market of pens consists of three consumers who's demand curves are P=15-0.5Qa. P=5-0.111Qb and P=5-0.2Qc. The supply function given is P=5-0.25Qs.a) calculate the market price and output for pens for the month of March 2023 and show your answer graphically.
In the Cournot equilibirum, what is the market price and units produced by firm 1 and firm 2?
Given the demand equation which is Qdx = 80 - Px + Py, compute the Qdx if the price of “x” is still 15 pesos but the price of “y” becomes 20 pesos. Please explain. A. 70 kg B. 75 kg C. 80 kg D. 85 kg E. None of the above
YorMagnets and YorMugs are two companies selling merchandise to tourists visiting the city of York. YorMagnets sells fridge magnets and YorMugs sells mugs with images of popular attractions. Assume that YorMagnets is the only company producing magnets for York and YorMugs is the only company producing local mugs. The daily demand for magnets (until 2019) is given by D1 = 50/9 – 200/9 P1 + 100/9 P2, where P1 is the price of magnets and P2 is the price of mugs. The daily demand for mugs (until 2019) is given by D2 = 500/9 – 200/9 P2 + 100/9 P1. The marginal cost of producing magnets is £0.50 per magnet and the marginal cost of producing mugs is £2.00 per mug. Both firms simultaneously choose their quantities. You may assume that both firms aim to maximise profits. Are magnets and mugs (perfect) complements or (perfect) substitutes? Explain your answer. How would you characterise this market? Explain your answer. Calculate the equilibrium price for both products and quantity…
Consider the coffee market and the sugar market. Suppose that these two goods are complements. For each of these two goods, the demand curve is decreasing, while the gold curve is increasing. If the demand for coffee increases, then the equilibrium market price for sugar : a)decreased. (b) remains unchanged. (c) increases (d) There is not enough information to conclude.
Hula Products has reintroduced the hula hoop to the world and faces a growing demand for its product in two distinct markets: the United States and Europe. Demand in these markets is: PU = 20 - .1QU and PE = 10 - .05QE., where all quantities are expressed in thousands of units (i.e. QU = 50 means 50 thousand units). Hula can produce hoops at no cost. The maximum Hula can produce is 80 thousand hoops. How many should be sent to Europe (QE)? Enter as a value (answer should be between zero and 80).
If the price per unit of good A is P175 quantity purchased is valued at 5,250 units and quantity supplied equals 2,500 units. If price changes by P1, quantity demanded changes by 4 units for consumer demand and quantity supplied changes by 2 units. Determine the demand and supply functions. Determine the price and quantity at equilibrium, using algebraic solution. Graph demand and supply curves on one set of axes and highlight the following: price-intercepts of demand and supply curves, quantity-intercepts of demand and supply curves, and the equilibrium point. (Make sure to LABEL your graph accordingly.)
Johnson's Household Products has a division that produces two types of toothpaste: a regular toothpaste and a whitening tooth paste. The demand equations that relate the prices, p and q (in dollars per thousand units), to the quantities demanded weekly, x and y (in units of a thousand), of the regular toothpaste and the whitening toothpaste are given by p=3000-20 x-10 yp=3000−20x−10y and q=4000-10 x-30 yq=4000−10x−30y respectively. The fixed cost attributed to the division is $20,000/week, and the cost for producing 1000 tubes of regular and 1000 tubes of whitening toothpaste is$400 and $500, respectively. a. What is the weekly total revenue function R(x, y)? b. What is the weekly total cost function C(x, y)? c. What is the weekly profit function P(x, y)? d. How many tubes of regular and whitening toothpaste should be produced weekly to maximize the division's profit? What is the maximum weekly profit?
Using the supply and demand functions below, derive the demand and supply curves if Y=$55,000 and pc=$13. What is the equilibrium price and quantity of coffee? Part 2 The demand function for coffee is Q=8.5−p+0.01Y, where Q is the quantity of coffee in millions of pounds per year, p is the price of coffee in dollars per pound, and Y is the average annual household income in high-income countries in thousands of dollars. The coffee supply function is Q=9.6+0.5p−0.2pc, where pc is the price of cocoa in dollars per pound. Part 3 The equilibrium price of coffee is p=$enter your response here per pound and the equilibrium quantity is Q=enter your response here millions of pounds per year. (Enter your responses rounded to two decimal places.)