3. Philips Industries manufactures a certain product can be sold directly to retail outlets or to the Superior Company for further processing and eventual sale as a completely different product. The demand function for each of these markets is: P = 60 P2 = 40 Retail Outlets: 201 %3D Superior Company: Q2 where P and P2are the prices charged and Q1 and Q2 are the quantities sold in the respective markets. Philips's total cost function for the manufacture of this product is: TC = 10 + 8(Q1 + Q2) (а) Determine Philips's total profit function. (b) What are the profit-maximizing price and output levels for the product in the two markets? (c) At these level of output, calculate the marginal revenue in each market.
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- 3. Philips Industries manufactures a certain product can be sold directly to retail outlets or to the Superior Company for further processing and eventual sale as a completely different product. The demand function for each of these markets is: P = 60 P2 = 40 201 %3D Retail Outlets: Q2 Superior Company: where P and P2are the prices charged and Q, and Q2 are the quantities sold in the respective markets. Philips's total cost function for the manufacture of this product is: TC 10 + 8(Q1 + Qz) %D (a) Determine Philips's total profit function. (b) What are the profit-maximizing price and output levels for the product in the two markets? (c) At these level of output, calculate the marginal revenue in each market. (d) What are Phillips's total profits if the firm is effectively able to charge different prices in the two markets? (e) Calculate the profit-maximizing level of price and output if Phillips is required to charge the same price per unit in each market. What are Phillips's profits…Presently, APlus Transport and Big Movers are the only suppliers of services that haul heavy construction equipment between jobs within the Midwest. No other suppliers have the equipment necessary to perform the service. The market inverse demand for these hauling services is given below. P-4,030-40 where P is price per trip and Q is total number of trips per year. For simplicity, also assume that neither firm has fixed costs. From company records, you are given the following variable cost function for each firm: TVC,=300, TVC, - 800 a. Assume these two competitors operate as a two-firm Cournot duopoly. Find the reaction functions for each firm. b. Calculate the Cournot market equilibrium price-output solutions for each firm including their respective profits. c. Suppose Big Movers shuts down operations so that APlus now has a monopoly in this market. What is the price, quantity, and profits for APlus after this change? d. Summarize the results of your findings over the two possible…Attempt all questions. Q1. a) A local Pepsi company has total costs of production given by the equation TC-500+10q+Sq2. This implies that the firm's marginal cost is given by the equation MC 10+10q. The market demand for cold drink is given by the equation QD-105 (1/2)*P. Write the equations showing the company's average total cost and average variable cost and average fixed cost, each as a function of q. Show the firm's MC, ATC and AVC on one graph. What is the breakeven price and breakeven quantity for this firm in the short run? What is the shutdown price and shutdown quantity for this firm in the short run? If the market price of the output is $50, how many units will this firm produce? iv) Assuming the cold drink industry is perfectly competitive, what output would be produced by the firm in long-run equilibrium? What would be the long-run equilibrium price? i) ii)
- 2. You are the Southeastern Michigan regional manager at Coca-Cola, responsible forproduction and pricing in the Metro Detroit area. Your primary competitor is Pepsi. The marketresearch team at Coca-Cola is thinking about launching a new product, Orange Vanilla Coke, toboost the brand. The cost function to produce a 12-pack of 12 fl. oz. cans of Orange VanillaCoke is C(qcoke) = 0.25qcoke and the market research team has estimated inverse market demandfor a 12-pack of this new “pop” in Southeastern Michigan to be P = 10.25 – 0.00025Q. a. Assuming Pepsi decides not to produce a similar product, allowing Coca-Cola to maintainmonopoly power in the market for orange vanilla cola, what price and quantity will youchoose to maximize profit? How much profit does Coca-Cola earn?b. What price and quantity you would choose to maximize profit if Pepsi spies discover yourproduct before launch, allowing Pepsi to produce and launch an identical product at the sametime. For your answer, assume the cost…Sampson Ltd produces two products that can be produced on either of two machines. Each month, only 5o0 hours of time are available on each machine. The time required to produce each item by hour and machine is: Machine Machine Product 1 Product 2 3 4 Month Month 1 Month 2 Month 1 Demand Demand Price Price Product 1 100 160 $45 $65 $10 Product 2 120 110 $35 The demand and price point for each product that customers are willing to pay are above. The company goal is to maximize revenue from sales from the next two months. Based on the provided information, how many constraints does this problem have excluding the non-negativity constraints?A local company is planning to manufacture and market a four-slice toaster. For this toaster, the research department’s estimates are aweekly demand of 300 toasters at a price of $25 per toaster and a weekly demand of 400 toasters at a price of $20. The financial department’s estimates are fixed weekly costs of$5,000 and variable costs of $5 per toaster. a) Assume that the relationship between price ? and demand ? is linear. Use the research department’s estimates to express ? as a function of ? and determine the domain of the function. b) Using your knowledge from Finite Math, determine the Revenue function in terms of ?. c) Determine the Marginal Revenue at 2 different production levels for example 250 and 500 units. Interpret these results. (HINT: Consider what a positive or negative first derivative implies) d) Assume that the cost function is linear. Use the financial department’s estimates to express the cost function interms of ?. e) Determinethe Marginal costand interpret the…
- Q3. The management of a manufacturing company has the following information: Revenue function: R = 2700Q – 15Q? Profit-maximizing price is 1500 units. 1\ Using the above information, determine the following: i. Profit-maximizing quantity. ii. Revenue-maximizing quantity. 2\ Suggest a cost function which results in a maximum profit value to be between OMR (25000 and 65000), write the maximum profit value.What is the profit maximization for apex firm if we have the following data quantitiy /unit ={0,1,2,3,4,5,6,7,8,9,10} total variable cost =[0,100,180,220,300,390,500,640,800,1000,1250} 2. If the market price dropped to $80, what is the profit-maximizing level of output? What is Apex’s profit (or loss) in this case?3. If the market price dropped further to $40, what is the profit-maximizing level of output? What is Apex’s profit (or loss) in this case?4. Comment on your answers to parts (2) and (3)A local newspaper currently has 84,000 subscribers at a quarterly charge of $30.Market research has suggested that if the owners raise the price to $32, they wouldlose 5,000 subscribers. Assuming that subscriptions are linearly related to theprice, what price should the newspaper charge for a quarterly subscription tomaximize their revenue?a) Find the cost function (Hint: find slope and use point-slope form to find thecost function) b) Find the revenue function c) Find the maximum revenue d) Find the profit function
- 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 – P1Sri 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) Required. 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.? 2. 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 thesameprice in the two markets what are the profit…The Berber Corporation's total cost function is 200 9Q + 3Q2 TC MC 9+6Q where TC is the total cost in dollars, Q is quantity, MC is marginal cost per additional unit and P is product price Which rule should Burr Corp use to select a level of output that will maximize profit? If the firm sells its product in a perfectly competitive market and the current market price for its product is $81, what is its optimal output rate (Q)? At this level of output what is its expected profit (n)?PakPerfect Inc. estimates equation of its total costs of production as TC = 500 + 10Q + 5Q2 and market demand for its product as Qd = 105 – (1/2) P, where Q is quantity in units and P is price in Pak$. a- Write the equations of the firm’s costs, as a function of Q: Average Total Cost ATC Average Variable Cost AVC Average Fixed Cost AFC b- Given above costs can you determine what will be the firm’s production in Stage 1? c- What is the breakeven price and breakeven quantity for this firm?