Suppose Neu Train is the only high-speed railway between City A and City B. She operates with a cost function of C = 2,000 + 5Q2 - 500Q. Furthermore, an estimate shows that the inverse market demand for the high- speed railway between the two cities is P = 14,500 – 70Q. Calculate the profit-maximizing output level and the price of Neu Train.
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Suppose Neu Train is the only high-speed railway between City A and City B. She operates with a cost function of C = 2,000 + 5Q2 - 500Q.
Furthermore, an estimate shows that the inverse market demand for the high- speed railway between the two cities is P = 14,500 – 70Q.
Calculate the profit-maximizing output level and the price of Neu Train.
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- Q1: 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:Suppose 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…Q1: 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,- 100-4P,). 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:
- 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…Consider a wholesale electricity market with two types of generators: coal plants and natural gas plants. There are 10 generators for each fuel type. Each generator has a capacity of 1,000 MW. Marginal costs vary across generation types: $10 per MWh for coal and $20 per MWh for natural gas. During peak hours, demand is given by Q = 30,000 – 100P (measured in MWh). During semi- peak hours, demand is given by Q = 22,000 – 100P. During off-peak hours, demand is given by Q = 20,000 – 100P. Assume that a day consists of one off-peak hour and either a semi-peak or a peak hour (so a day contains two hours only!). Probabilities of semi-peak vs. peak hours are 50%- 50%. For now, assume that the market is competitive. Calculate the peak, the semi-peak, and the off-peak prices of electricity. What are the expected daily profits for each plant?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 xs= 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?
- The inverse demand for tea is given by P= 10 – 0.04Q, where Pis the price per a gram of tea and Qis the total number of grams of tea brought to market. There are two tea shops in the market. Shop 1's cost function is given by C = 0.01q,?, where qı is the number of grams of tea it brings to market. Shop 2's cost function is given by C2 = 0.01q2², where qp is the number of grams of tea it brings to market. Given that the two shops compete by setting output (Cournot), answer the following. a) Identify shop 1's reaction function to shop 2's output to within 2 decimal places (e.g. 0.33). 91= Number - Number 92 b) Identify shop 2's reaction function to shop 1's output to within 2 decimal places (e.g. 0.71). q2= Number Number 91 c) To within two decimal places (e.g. 0.63) what is the equilibrium output level of each shop and the equilibrium per gram price for tea. Shop 1 will produce Number grams of tea and shop 2 will produce Number grams of tea. The equilibrium market price is £ NumberA cement factory and a hotel are situated next to each another. The cement factory’s demand is described by the inverse demand function: PCement = 200 – C. The factory’s cost function is CCement = 2C2. The inverse demand function for the hotel is given by: PHotel = 100 – H – 2C (in essence, as the factory produces more cement C, the hotel’s demand goes down because of the pollution the factory generates). The hotel’s cost function is: CHotel = ½ H2. a)Set up the profit maximization problems of the factory and the hotel separately. Then solve for the profit-maximizing quantities and prices for each party. Suppose a good-natured “social planner” wants to impose a Pigouvian tax on the cement factory. Find the equilibrium tax rate T* that would allow achieving the socially optimal outcomeYou are a manager at Boston Brew'ns, the official microbrewery of the Boston Bruins. Applying what you learned at Cal State East Bay prior to moving to the east coast, you have estimated the cost function for brewing beer to be c(Q) = 2+Q+Q². Further, you have estimated the elasticity of demand for your signature beer, finding it to be ε =-1.5. Your firm has some price setting power because you and the other breweries in town offer differentiated products. The firm is currently charging a price of $6 per beer and selling 100 beers. Is this a profit-maximizing price? Explain. Should you increase or decrease the markup? Explain.
- The FIA Formula 1 World Championship to be held during the 2021 Mexico City Grand Prix has a total cost function equal to CT = Q33 + Q2 + 125Q and an inverse demand function of P = 200−2Q. Now suppose there is a new company managing this event, so the total cost function becomes CT = 4Q. This new company intends to sell at two different prices depending on the place that the spectators occupy at the Hermanos Rodríguez Autodrome. For the Red Zone Boxes. The estimated demand will be q1 = 32−12p1 and for the Green Zone Boxes It will be q2 = 42 − p2. The number of tickets sold for the Red Zone and Green Zone will be: 15; 84 23; 16 15; 19 33; 45There are two different demand curves at your movie theaters. During the weekends, the inverse demand function is P=20-0.001Q, on weekdays, it is P=15-0.002Q. The marginal cost if 25,000 per movie. Determine prices for the weekends and weekdays.Suppose that BMW can produce any quantity of cars at a constant marginal cost equal to $20,000 and a fixed cost of $10 billion. 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. The demand for BMWS in each market is given by QE = 4,000,000 – 100PE and Qu = 1,500,000 – 20PU 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. a. What quantity of BMWS should the firm sell in each market, and what should the price be in each market? What should the total profit be? (round dollar amounts to the nearest penny and quantities to the nearest integer) In Europe, the equilibrium quantity is 1000000 cars at an equilibrium price of S 30000 . While in the United States, the equilibrium quantity is 550000 cars at an equilibrium price of $ 47500 . BMW makes a total profit of $ 15125000000 . b. If BMW were forced to charge the…
