Kia Motors manufactures cars that are sold through dealers. The (daily) demand for Kia cars in a certain market is given byq(6) = -P+120and let the (constant) marginal cost of manufacturing a car be: MC =31.Suppose that Kia charges a fixed fee for the dealer to be able to buy cars in order to sell in its dealership (call it a membership fee), and charges a price p for every cardealer once the membership is paidWhat would the price that Kia charges the dealerWhat would the membership price beInstead suppose the market for dealers is perfectly competitive, and Kia charges a wholesale price w to the dealerWhat is the price that the dealer will setWhat will be the quantity the dealer will demand q(w)=What would be the price Kia will setWhat is the equilibrium quantity of Kia cars soldWhat are the profits of the dealersWhat are the profits of Kia

Demand: Demand for a commodity can be defined as the desire and willingness of a consumer to acquire…

Answered: Kia Motors manufactures cars that are…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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?
At an amusement park with a “horror” roller coaster, management has estimated that the average visitor has a demand function P = 9 – (Q/3), where P is the average ride price and Q is the number ofof routes per visitor. The total cost to the average visitor is C = 1 + Q.Management is considering two pricing schemes. Either charge P per ride, or charge a general admission price that will allow the visitor to do as many rides as they want.(a) If management chooses per-ride pricing, what price will it charge and what will be the profit per visitor?(b) If he chooses a general entry price this will be such as to extract all of the surplus from each consumer. What will be the general admission price and profit per visitor?(hint: the general input price will be revenue P×Q + CS, where CS = 0.5×(9 – Ρ)×Q is the consumer surplus corresponding to the profit-maximizing quantity).
[Suppose] A Cmpany is the sole provider of electricity in the various districts of Dubai. To meet the monthly demand for electricity in these districts, which is given by the inverse demand function: P = 1,200 − 4Q, the company has set up two electric generating facilities: Q1 kilowatts are produced at facility 1 and Q2 kilowatts are produced at facility 2; where Q = Q1 + Q2. The costs of producing electricity at each facility are given by C1(Q1) = 8,000 + 6Q1 C2(Q2) = 6,000 + 3Q2 + 5Q22 What is the MR function? What is the MC function of each facility? What is the MC function of the firm?
[Suppose] A Cmpany is the sole provider of electricity in the various districts of Dubai. To meet the monthly demand for electricity in these districts, which is given by the inverse demand function: P = 1,200 − 4Q, the company has set up two electric generating facilities: Q1 kilowatts are produced at facility 1 and Q2 kilowatts are produced at facility 2; where Q = Q1 + Q2. The costs of producing electricity at each facility are given by C1(Q1) = 8,000 + 6Q1 C2(Q2) = 6,000 + 3Q2 + 5Q22 Calculate the profit maximizing output levels of each factory?
Suppose that Kenya Railways serves two major separate customers, namely: urban users and rural users of the railway line. The company can charge different prices to these two customers. Suppose that the total cost for running trips by Kenya Railways is given by the following cost function: C= 25+10Q Where: C = total cost Q = total output of trips made by the railway line The inverse demand functions for the two customers are given as follows: P1 = 40-5Q1 P2 =90-2Q2 Where: p1 = Price charged to urban users; and is number of trips by urban users p2 = Price charged to rural users; and is number of trips by rural users Required: How many trips should Kenya Railway serve in each market and what price should the firm charge in each market? Compute the profits of Kenya Railways without price discrimination From your knowledge of the relationships between various costs of production, fill in the blanks of Table 1 below: Table 1 Q TC…
Consider PNW Airlines, an airline focused on transporting cargo. Their fleet is composed of four cargo airplanes. Total cargo capacity of the fleet is 100,000 cubic feet. The monthly cost of maintaining and operating the fleet is $50,000. Market research indicated that the demand curve for cargo capacity is d=300,000-25,000p where d is the demand across all segments and p is the transport price per cubic foot. What is the price that maximizes profit for PNW Airlines if all the demand comes from a single segment?
Pizza Hut and Dominoís are considering to open a shop in a new shopping precinct in Burwood. Suppose both charge $10 for a pizza (price competition is ignored here), and the aggregate local demand for pizza at this price is Q: If both Örms open a shop in the shopping precinct, Q is shared equally between the two shops. On the other hand, if there is only one pizza shop in the shopping precinct, the total demand Q goes to that shop. The total cost function for Pizza Hut is TC P(Q) = 5Q + 6000 and the total cost function for Dominos is TCD(Q) = 5Q+ 6000: Each has two strategies: Open a shop or Not, and they make their decisions simultaneously. The payoff is zero for a firm that does not open a shop in the shopping precinct. Suppose Q= 3000: Construct a 2 X 2 payoff matrix for this entry game between Pizza Hut and Dominoís and Önd the NE of the game. Suppose Q = 2000:Construct a 2x2 payoff matrix for this entry game between Pizza Hut and Dominoís and Önd the NE of the game.…
I need to second half answered. JointJuice produces a prepackaged joint support supplement for relief of joint pain with 180 tablets per bottle and operates in a perfectly competitive market. Basically, all the firms in this competitive market have technologies (production and cost conditions) that are the same as JointJuice’s. Suppose JointJuice’s total cost function is given by the following where q is JointJuice’s quantity of packages per day: C(q) = 250 + 6q + 0.1q^2 The market demand function for the output in this market is given by: Q = 1848 - 2P If there are 20 identical firms in this industry, find the market equilibrium price for the prepackaged supplements. Calculate JointJuice’s optimal output level and profits given the market price for the product. If JointJuice is typical of the firms in this industry calculate the firm’s long-run equilibrium output, price, and profit level. - answers for first half JointJuice is a prepackages supplement-producing firm. Suppose…
The average consumer at a firm with market power has an inverse demand function of P = 10 − Q. The firm's total cost function is C = 2Q. If the firm engages in two-part pricing, what is the optimal price to charge a consumer for each unit purchased? Multiple Choice $2 $0 $1 $4
The second-largest public utility in the nation is the sole provider of electricity in 32counties of southern Florida. To meet the monthly demand for electricity in these counties,which is given by the inverse demand function P = 1,200 − 4Q, the utility companyhas set up two electric generating facilities: Q1 kilowatts are produced at facility 1 andQ2 kilowatts are produced at facility 2 (so Q = Q1 + Q2). The costs of producing electricityat each facility are given by C1(Q1) = 8,000 + 6Q12 and C2(Q2) = 6,000 + 3Q22,respectively. Determine the profit-maximizing amounts of electricity to produce at thetwo facilities, the optimal price, and the utility company’s profits. (LO1, LO8)
Exercise 4.6 An econometrician hired to analyse a local golf course has determined that there are two types of golfers, the regular and the occasional. The annual demand for games from regular players is given by QH = 24 – 0.3P, where P is the price of a round of golf. On the other hand, the annual demand for occasional items is given by QO = 10 – 0.1P. The marginal cost and the average total cost per item are equal to €20. a) If you could distinguish between regular and casual players, what price would be set for each type? How many games would each type of player play? How much profit could the golf course generate? Represent graphically. b) As an alternative to the discrimination of third degree prices, those in charge consider a double tranche rate according to which the members can play as many games as they wish at a price of € 20 per game. How much profit will the golf course generate if it charges all players the same annual fee for becoming a member of the club? What if you…
Apparel manufacturer Nike produces high-end and low-end versions of their running shirts. They estimate that the demands for their products are given by: High-end shirts: P = 130 - 2QH , andLow-end shirts: P = 80 - QL, where Q is measured in 1000 shirts, "H" denotes High-end and "L" denotes Low-end Both types of shirts are produced on the same production line in the same facility, so the marginal cost of producing and selling both types of shirts is constant at $30. Supposing that (i) the two demands are independent and (ii) Nike can produce and market the shirts such that the high- and low-end markets are successfully segmented, what are the profit-maximizing prices Nike would charge for each version?Answer Options:a) by the midpoint rule, PH = $65 and Pl = $40b) PH = $80 and PL = $55c) Nike will set price equal to marginal cost for both versionsd) PH = $130 and PL = $80

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