Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 20PAA
To determine
To explain:
The relation between memory modules and desktop systems.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Revenue The Better Baby Buggy Co. has just come out with a new model, the Turbo. The market research department predicts
that the demand equation for Turbos is given by q = -3p + 402, where q is the number of buggies the company can sell in a
month if the price is $p per buggy. At what price (in dollars) should it sell the buggies to get the largest revenue?
p = $
What is the largest monthly revenue (in dollars)?
$4
Suppose that Sony Corporation has developed a new all in one, easy to use, big screen computer / TV (‘BCTV’). This BCTV is unique in the market and Sony estimates that the demand for this new BCTV is: P = 13 – Q, where P is in thousands of dollars and Q is in thousands of BCTVs. The total cost of producing the BCTV is given by TC = 2 + 7Q where TC is in thousands of dollars. Samsung is considering entering the same market with its own BCTV and faces the same cost curve as Sony. Currently Sony has the capacity to produce 2000 units (i.e., Q = 2). Sony is considering whether to expand its capacity to produce 4000 units (i.e., Q = 4). This would double fixed costs for Sony. Samsung would enter the market with 2000 units of capacity if they entered the market. Both firms plan to use all of their capacity and sell at the resulting market price.
a. Construct the payoff matrix for this game
b. Does either firm have a dominant strategy?
c. What is the Nash equilibrium?
d. If Sony…
Bavarian Crystal Works designs and produces crystal wine decanters for export to international markets. The marketing manager of Bavarian Crystal Works estimates the demand curve for each month to be:
P=1,000-0.0025Q
where Q is the number of wine decanters produced annually.
Bavarian Crystal Works also pays a lease for its factory and equipment every month in the amount of $1,000,000. Finally, the cost to produce each wine decanter is $200.
What is the marginal revenue at 40,000 units?
If Bavarian Crystals is currently producing 40,000 units would you recommend they increase their production?
Chapter 2 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
Knowledge Booster
Similar questions
- Bavarian Crystal Works designs and produces crystal wine decanters for export to international markets. The marketing manager of Bavarian Crystal Works estimates the demand curve for each month to be: P=1,000-0.0025Q Where Q is the number of wine decanters produced monthly. Bavarian Crystal Works also pays a lease for its factory and equipment every month in the amount of $1,000,000. Finally, the cost to produce each wine decanter is $200. What quantity would maximize profits? What is the optimal price for Bavarian Crystals to charge?arrow_forwardBigSwaba Corp produces virus home test kits which it sells in the market. It pays a marketing company to post Instagram images of people using the kits in the comfort of their own homes. The demand for the kits and cost of production are as follows: 1 1 Cost: C=200+=q´ +m 1/2 Demand: p=48+m/: Where m is the firm's marketing expenditure. Assume the CEO of BigSwaba asks you to help the company maximize profit. а. How many kits should the company sell and at what price? b. What is the demand elasticity at this output level? C. What should their marketing budget be? Assume the CEO of BigSwaba realizes her bonus will determined not by profits, but by the firm's revenue. Maintaining the same marketing budget as in part a: d. What quantity should the firm produce to maximize revenue?arrow_forwardThe REDY Company produces a specialty cement used in the construction of roads. REDY is a price-setting firm and estimates the demand for its cement using a demand function in the linear form: Q = f( P, M, PR) where Qc = demand for cement/month (in yards) Pc = the price of cement per yard, M = country’s tax revenues per capita, and PR = the price of asphalt per yard. The manager of REDY obtained the following results in her attempt to estimate the demand for cement in the succeeding months. The results are presented below: DEPENDENT VARIABLE Qc R- SQUARE F-RATIO P-VALUE ON F OBSERVATIONS 64 0.8093 84.872 0.0001 VARIABLE PARAMETER ESTIMATE STANDARD ERROR T-RATIO P-VALUE INTERCEPT 8.20 4.01 2.04 0.0461 PC -3.54 1.64 -2.16 0.0357 M…arrow_forward
- Smooth Sailing, Inc., has estimated the demand function for its sailboats (quantity purchased annually) as follows: QD= 89,830-40PS+20Px+15Py+2I+0.001A+10W Where, QD = quantity purchased, PS = the price of smooth sailing sailboats, PX = the price of Company X’s sailboat, PY = the price of Company Y’s motorboat, I = per capita income in dollars, A = dollars spent on advertising, and W = number of favorable days of weather in the southern region of the United States. Suppose that PS = $9,000, PX = $9,500, PY = $10,000, I = $15,000, A = $170,000, and W = 160. Find the price elasticity of demand at that point. Is elastic, inelastic, or unitary elastic in part (a)? Justify?arrow_forwardYou are the manager of Zokia Ghana Limited, a producer of beans. In Ghana, it is possible to produce beans or groundnut using the same resources. Therefore, producers are able to switch from beans to groundnut production depending on market conditions. Consequently, Zokia consulted an Economist who estimated the demand function for beans as: Q = 600 – 4P, – 0.03M – 12P, + 15T + 6Pe + 1.5N where is the quantity demanded of beans each month, På is the average price of beans (in Ghana Cedis), M is the average household income (in GH¢), P, is the price of groundnut (in GH¢), T is a consumer taste index ranging in value from 0 to 10 (the highest rating), Pe is the price (in GH¢) consumers expect to pay next month for beans, and N is the number of buyers in the market for beans. Assume the following initial values: Ps-5, P,= 40, T¯ 6.5, P.=5.25, N=2000, Q =2479 Using the concept of own price elasticity, advise management on price change in order to increase revenue. a) b) Explain to your…arrow_forwardAn analyst for FoodMax estimates that the demand for its “Brand X" potato chips is given by: InQx = 10.34 – 3.2 In Px+ 4Py+ 1.5 In Ax where Qx and Px are the respective quantity and price of a four-ounce bag of Brand X potato chips, Pyis the price of a six-ounce bag sold by its only competitor, and Ax is FoodMax's level of advertising on brand X potato chips. Last year, FoodMax sold 5 million bags of Brand X chips and spent $0.25 million on advertising. Its plant lease is $2.5 million (this annual contract includes utilities) and its depreciation charge for capital equipment was $2.5 million; payments to employees (all of whom earn annual salaries) were $0.5 million. The only other costs associated with manufacturing and distributing Brand X chips are the costs of raw potatoes, peanut oil, and bags; last year FoodMax spent $2.5 million on these items, which were purchased in competitive input markets. Based on this information, what is the profit-maximizing price for a bag of Brand X…arrow_forward
- The marketing research department for a company that manufactures and sells memory chips for microcomputers established the following price-demand and revenue functions: p(x)=75-3 xp(x)=75−3x Price-demand function R(x)=x p(x)=x(75-3 x)R(x)=xp(x)=x(75−3x) Revenue function, where p(x) is the wholesale price in dollars at which x million chips can be sold, and R(x) is in millions of dollars. Both functions have domain 1 <= x <= 20arrow_forwardQ1: Analytical part - 8% Best Orange Juice Company is located in Oman. The cost function for total orange juice production (x) is given by C(q) = 0.25x2. Their orange juice is demanded only in Muscat (Muscat demand is Xm- 100-2Pm) and Salalah (Salalah demand is X 100-4Ps). Therefore, the total demand is x-xm+ Xs. If the company can control the quantities supplied to each market, how many should it sell in each location to maximize total profits? What price would it charge in each location? Answer:arrow_forwardSuppose that BMW can produce any quantity of cars at a constant marginal cost equal to $50 and a fixed cost of $22,500. You are asked to advise the CEO as to what prices and quantities BMW should set for sales in Europe and in the United States to maximize its profits. The demand for BMWS in each market is given by: QE = 8,000 - 80PE and Qu = 4,000 - 20 Pu, where the subscript E denotes Europe, the subscript U denotes the United States. Assume that BMW can restrict U.S. sales to authorized BMW dealers only. Support your answers %3D graphically as well. a. If, by an international agreement between Europe and United States, BMW were forced to charge the same price in each market, what would be the quantity sold in each market, the equilibrium price, and the company's profit? b. Suppose now that Europe and United States signed a new trade package under which BMW now can charge different prices across the two markets. What quantity of BMWS should the firm sell in each market, and what…arrow_forward
- [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? Calculate the profit maximizing output levels of each factory? What is the profit maximizing level of price? What is the maximum profit?arrow_forward[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?arrow_forward[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? What is the profit maximizing level of price? What is the maximum profit?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education