Suppose you are the marketing manager for Fruit of the Loom. An individual's inverse demand for Fruit of the Loom women's underwear is estimated to be P = 25-3Q (in cents). If the cost to Fruit of the Loom to produce an item of women's underwear is C(Q) = 1 + 4Q (in cents), compute the profit Fruit of the Loom will earn by charging the optimal block price. • $0.73 • $1.37 • $108.50 • $136.50
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- Suppose you are the marketing manager for Fruit of the Loom. An individual's inverse demand for Fruit of the Loom women's underwear is estimated to be P = 25 − 3Q (in cents). If the cost to Fruit of the Loom to produce an item of women's underwear is C(Q) = 1 + 4Q (in cents), compute the profit Fruit of the Loom will earn by charging the optimal block price. a. $108.50 b. $0.73 c. $1.37 d. $136.50The inverse demand for tea is given by P = 8 – 0.03Q, where Pis the price per a gram of tea and Q is 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 = 0.02q,?, where q, is the number of grams of tea it brings to market. Shop 2's cost function is given by C2 = 0.02q22, where q2 is the number of grams of tea it brings to %3D %3D 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 £…Suppose you are the marketing manager for Fruit of the Loom. An individual's inverse demand for Fruit of the Loom women's underwear is estimated to be P = 25 − 3Q (in cents). If the cost to Fruit of the Loom to produce an item of women's underwear is C(Q) = 1 + 4Q (in cents), compute the price Fruit of the Loom should charge for a package of women's underwear. $108.50 $1.09 $1.02 $136.50
- 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 £ NumberExercise 4.6 An econometrician hired to analyse a local golf course has determined that there are two types of golfers, the regular and the occasional. The annual demand for games from regular players is given by QH = 24 – 0.3P, where P is the price of a round of golf. On the other hand, the annual demand for occasional items is given by QO = 10 – 0.1P. The marginal cost and the average total cost per item are equal to €20. a) If you could distinguish between regular and casual players, what price would be set for each type? How many games would each type of player play? How much profit could the golf course generate? Represent graphically. b) As an alternative to the discrimination of third degree prices, those in charge consider a double tranche rate according to which the members can play as many games as they wish at a price of € 20 per game. How much profit will the golf course generate if it charges all players the same annual fee for becoming a member of the club? What if you…There is only one firm that produces NICE sneakers, and its product has no substitutes. There are two types of customers in the market for NICE sneakers; type H and type L with the following demand functionsQH = 2000 - 20P andQL = 500 - 5P . Moreover, the firm’s cost function isTC = 100 1. Plot the inverse demand curves and the marginal cost for each type of customers. 2. Imagine that there is one customer of each type (2 customers in total) and the firm is not able to identify customer’s type. If the firm wants to charge a fixed fee for entering the shop and then charge for each pair of sneakers (a two part tariff pricing strategy), what is the fixed entrance fee, and what is the product price that maximizes the monopolist’s profit? Hint: do you sell to both customers? 3. What is the firm’s maximized profit with this pricing strategy? 4. Now, imagine that the firm is able to identify each customer and we have only one consumer of each type. What is the profit if the…
- There are two types of goat milk consumers in the market: Elves and Hobbits. Elves' inverse demand function is pE(g) = 10 – 8qE , and Hobbits' inverse demand function is pH(p) = 12 – 7qH . Suppose the market has only one goat milk producer, Dolf, whose cost function is C(q) = 4q. Dolf can easily tell the difference between Elves and Hobbits, and he can charge different prices for Elves and Hobbits respectively. What will Dolf's total profits be? Round your answer to 2 decimal points. Answer: 191 The correct answer is: 3.41Dunder Mifflin sells specialty paper to commercial clients in the Scranton area. Some of Dunder Mifflin's clients are seen as 'intensive users' who are price-sensitive, and have demands given by: P = 8 – 0.1Q where Q is the number of reams of paper desired per week. Other clients are less-intensive users of paper and have inverse demands given by: P = 10 – 0.2Q. If Dunder Mifflin's marginal cost of paper is zero, and it attempts to separate more-intensive and less-intensive buyers, what price should Dunder Mifflin set for each group? How much profit do they earn under this system?In 2020, the town of Rollaville had a more-or-less competitive market for hot pretzel stands. Any respectable seller could set up a hot pretzel stand as long as certain health requirements are met. Each stand has the constant marginal cost of $4 per pretzel and can make 40 hot pretzels per day. Let the demand function for hot pretzels be given by D(p) = 600 - 40p, where demand is measured in number of hot pretzels per day, and price is measured in dollars. Assume that the industry is perfectly competitive. 1. In equilibrium, the price will be [Select] and there will be [Select] hot pretzel stands in equilibrium. 2. In 2021, the City Council of Rollaville created a hot pretzel stand licensing board and issued a license to each of the existing stands. The board stated that they would issue no more new licenses in 2021. Costs had not changed, but the demand curve for hot pretzel had become D(p) = 680 - 40p. The the new equilibrium price of a hot pretzel in 2021 is [Select] 3. In 2022, the…
- All consumers have identical demand for a pint of pistachio ice cream. Each person has a demand function of P = 30 – 2Q, where P is the price and Q is the number of pints. Marginal cost is $2. Design a two-part tariff and calculate profits.Stutz Department Store will buy 10 pairs of sunglasses if the price is $76 per pair and 30 pairs if the price is $26. The supplier of the sunglasses is willing to provide 35 pairs if the price is $81 per pair but only 5 pairs if the price is $21. Assuming that the supply and demand functions for the sunglasses are linear, find the market equilibrium point. Suppose that in a certain market the demand function for a product is given by 10p + q = 2,100 and the supply function is given by 50p − q = 1,350. (Assume price is measured in dollars.) If the government levies a tax of $3 per item, find the equilibrium point after the tax is levied. The tax is added to the selling price of the product.Based on Zangwill (1992). Murray Manufacturing runs a day shift and a night shift. Regardless of the number of units produced, the only production cost during a shift is a setup cost. It costs $8000 to run the day shift and $4500 to run the night shift. Demand for the next two days is as follows: day 1, 2000; night 1, 3000; day 2, 2000; night 2, 3000. It costs $1 per unit to hold a unit in inventory for a shift. a. Determine a production schedule that minimizes the sum of setup and inventory costs. All demand must be met on time. (Note: Not all shifts have to be run.) b. After listening to a seminar on the virtues of the Japanese theory of production, Murray has cut the setup cost of its day shift to $1000 per shift and the setup cost of its night shift to $3500 per shift. Now determine a production schedule that minimizes the sum of setup and inventory costs. All demand must be met on time. Show that the decrease in setup costs has actually raised the average inventory level. Is this…