Problem 5:Presently, Alpha Chemical and Beta Cleaners are the only suppliers of services thatclean and refurbish| large holding tanks at manufacturing plants in the Northeast. Noother suppliers have the equipment necessary to perform these treatments. The marketinverse demand for these cleaning services is given below.P=800-80where P is price per treatment and Q is total number of treatments per week. Forsimplicity, also assume that neither firm has fixed costs. From company records, youare given the following variable cost function for each firm:In the work that follows, you may round all your results to 2 decimal places to reducethe clutter in your answers.a.b.TVC₁ = 30TVC, =5QC.Suppose Elon Must is contemplating buying both companies and since Alphahas lower operating costs, his first thought is to shut down Beta and supply theentire market as a single plant monopoly. If he does this, what price will he chargeper treatment and how many treatments will he sell each week? What profits willhe expect to earn?Must has second thoughts about shutting down Beta. If he decides to go aheadwith the purchase and keep Beta in operation, he will operate the two plants as amultiplant monopoly. If he decides to go ahead and buy the two firms, what pricewill he charge per treatment and how many treatments will he sell each week?What profits will he expect to earn? How many treatments will be performed byeach operation?Summarize the results of your findings over the two possible outcomes. Inyour summary include price, quantity, and industry profits. Comment on yourresults.

Demand function P=800-8Q TVCa=3Qa2 TVCb=5Qb2

Presently, Alpha Chemical and Beta Cleaners are the only suppliers of services that clean and refurbish large holding tanks at manufacturing plants in the Northeast. No other suppliers have the equipment necessary to perform these treatments. The market inverse demand for these cleaning services is given below. P=800-80 where P is price per treatment and Q is total number of treatments per week. For simplicity, also assume that neither firm has fixed costs. From company records, you are given the following variable cost function for each firm: TVC₁ = 30%

Presently, Alpha Chemical and Beta Cleaners are the only suppliers of services that clean and refurbish large holding tanks at manufacturing plants in the Northeast. No other suppliers have the equipment necessary to perform these treatments. The market inverse demand for these cleaning services is given below. P=800-80 where P is price per treatment and Q is total number of treatments per week. For simplicity, also assume that neither firm has fixed costs. From company records, you are given the following variable cost function for each firm: TVC₁ = 30%

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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