Practical Management Science, Loose-leaf Version
5th Edition
ISBN: 9781305631540
Author: WINSTON, Wayne L.; Albright, S. Christian
Publisher: Cengage Learning
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Chapter 8.10, Problem 23P
Summary Introduction
To determine: The maximum sum of surplus of buyers and sellers.
Introduction: The variation between the present value of the
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Consider a buying firm and a supplier negotiating terms for a contract. Suppose the Marginal Benefit to the buying firm of additional contract provisions in a contract (x) to the firm is: MB = 20,000 – 400x. Suppose the Marginal Cost to the buying firm of additional contract provision to the firm is: MC = 100x. What is the optimal number of contract provisions?
Reconsider the previous question. If the maximum value (or price) of the contract that the buying firm is willing to pay for is $3,000, what would you expect the firm to do?
a) Use the spot market
b) Vertically integrate
c) Continue to contract
d) engage in holdup
Consider the following game of ’divide the dollar.’ There is a dollar to be split between two players. Player 1 can make any offer to player 2 in increments of 25 cents; that is, player 1 can make offers of 0 cents, 25 cents, 50 cents, 75 cents, and $1. An offer is the amount of the original dollar that player 1 would like player 2 to have. After player 2 gets an offer, she has the option of either accepting or rejecting the offer. If she accepts, she gets the offered amount and player 1 keeps the remainder. If she rejects, neither player gets anything.
Draw the game tree.Consider the following variant of the ’divide the dollar’ game.
Players 1 and 2 move simultaneously; 1 makes an offer to 2 and 2 specifies what would be an acceptable offer. For instance, player 1 might make an offer of 50 cents and player 2 might simultaneously set 25 cents as an acceptable offer. If player 1’s offer is at least as large as what is acceptable to player 2, then we will say that there is an agreement…
A company manufactures two products. If it charges price pi for product i, it can sell qi units of product i,where q1 = 60−3p1 +p2 and q2 = 80−2p2 +p1. It costs $5 to produce a unit of product 1 and $12 to produce a unit of product 2. How many units of each product should the company produce, and what prices should it charge, to maximize its profit?
Chapter 8 Solutions
Practical Management Science, Loose-leaf Version
Ch. 8.3 - Prob. 1PCh. 8.3 - Prob. 2PCh. 8.4 - Prob. 3PCh. 8.4 - Prob. 4PCh. 8.4 - Prob. 5PCh. 8.5 - Prob. 6PCh. 8.5 - Prob. 7PCh. 8.5 - In the lawn mower production problem in Example...Ch. 8.6 - Prob. 9PCh. 8.6 - Prob. 10P
Ch. 8.6 - Prob. 11PCh. 8.6 - Prob. 12PCh. 8.7 - Prob. 13PCh. 8.7 - Prob. 14PCh. 8.8 - Prob. 15PCh. 8.9 - Prob. 17PCh. 8.9 - Prob. 18PCh. 8.10 - Prob. 20PCh. 8.10 - Prob. 21PCh. 8.10 - Prob. 22PCh. 8.10 - Prob. 23PCh. 8.10 - Prob. 24PCh. 8 - Prob. 25PCh. 8 - Prob. 26PCh. 8 - Prob. 27PCh. 8 - Prob. 28PCh. 8 - Prob. 29PCh. 8 - Prob. 30PCh. 8 - Prob. 31PCh. 8 - Prob. 32PCh. 8 - Prob. 33PCh. 8 - Prob. 34PCh. 8 - Prob. 35PCh. 8 - Prob. 36PCh. 8 - Prob. 37PCh. 8 - Prob. 38PCh. 8 - Prob. 39PCh. 8 - Prob. 40PCh. 8 - Prob. 41PCh. 8 - Prob. 42PCh. 8 - Prob. 43PCh. 8 - Prob. 44PCh. 8 - Prob. 46PCh. 8 - Prob. 1CCh. 8 - Prob. 2C
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