Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Chapter 8, Problem 16PAA
To determine
Price and quantity combination of computers that should be produced to maximize firm's profit is to be ascertained.
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You have been appointed the new manager for Ghana Airways Company Limited, aninternational airline company that flies from the Kotoka International Airport in Accrato Heathrow Airport in London every day. The airline is described as a monopolist andhas the possibility of discriminating between its Business and Economy Travelers. Tohelp you price your services appropriately to maximize profit, you engaged aneconomist who estimated the demand function for both Economy and BusinessTravelers as: Q1 = 24 – 0.2P1 Economy Travelers Q2 = 10 – 0.05P2 Business Travelers Where Q1 and Q2 are the respective numbers of Economy and Business Travelers and P1 and P2are their respective fares (in GH¢). If the Total Cost (TC) of this airline company for flying thesetwo categories of travelers is given as TC = 35 + 40Q, where Q = Q1 + Q2 What can you say about the fares, number of travelers and profit of Ghana Airways CompanyLimited, with and without discrimination?
You have been appointed the new manager for Ghana Airways Company Limited, an international airline company that flies from the Kotoka International Airport in Accra to Heathrow Airport in London every day. The airline is described as a monopolist and has the possibility of discriminating between its Business and Economy Travelers. To help you determine the prices your services appropriately to maximise profit, you engaged an economist who estimated the demand function for both Economy and Business Travelers as:
Q1 = 24 – 0.2P1 Economy Travelers
Q2 = 10 – 0.05P2 Business Travelers
Where Q1 and Q2 are the respective numbers of Economy and Business Travelers and P1 and P2 are their respective fares (in GH¢). If the Total Cost (TC) of this airline company for flying these two categories of travellers is given as TC = 35 + 40Q, where Q = Q1 + Q2.
What can you say about the fares, number of travellers and profit of Ghana Airways Company Limited, with and without price discrimination
You are the manager of College Computers, a manufacturer of customized computers that meet the specifications required by the local university. Over 90 percent of your clientele consists of college students. College Computers is not the only firm that builds computers to meet this university’s specifications; indeed, it competes with many manufacturers online and through traditional retail outlets. To attract its large student clientele, College Computers runs a weekly ad in the student paper advertising its "free service after the sale" policy in an attempt to differentiate itself from the competition. The weekly demand for computers produced by College Computers is given by Q = 800 − 2P, and its weekly cost of producing computers is C(Q) = 1,200 + 2Q2. If other firms in the industry sell PCs at $300, what price and quantity of computers should you produce to maximize your firm’s profits? Price: $ Quantity: computers What long-run adjustments should you anticipate?
Chapter 8 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
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