Market Structures and Pricing Decisions Applied Problems
Week 4 - Assignment
Market Structures and Appraisement Decisions Activated Problems
Please complete the afterward two activated problems:
Robert’s New Way Exhaustion Cleaner Aggregation is a anew started baby business that produces exhaustion cleaners and belongs to a monopolistically aggressive market. Its appeal ambit for the artefact is bidding as Q = 5000 – 25P area Q is the cardinal of exhaustion cleaners per year and P is in dollars. Amount admiration processes accept bent that the firm’s amount action is represented by TC = 1500 + 20Q + 0.02Q2.
Show all of your calculations and processes. Describe your acknowledgment for anniversary catechism in complete sentences, whenever it is necessary.
What are the profit-maximizing amount and achievement levels? Explain them and account algebraically for calm P (price) and Q (output). Then, artifice the MC (marginal cost), D (demand), and MR (marginal revenue) curves graphically and allegorize the calm point.
How abundant bread-and-butter accumulation do you apprehend that Robert’s aggregation will accomplish in the aboriginal year?
Do you apprehend this bread-and-butter accumulation akin to abide in consecutive years? Why or why not?
Greener Grass Aggregation (GGC) competes with its capital rival, Better Lawns and Gardens (BLG), in the accumulation and accession of in-ground backyard watering systems in the affluent western suburbs of a above east-coast city. Aftermost year, GGC’s amount for the archetypal backyard arrangement was $1,900 compared with BLG’s amount of $2,100. GGC installed 9,960 systems, or about 60% of absolute sales and BLG installed the rest. (No agnosticism abounding added systems were installed by do-it-yourself homeowners because the genitalia are readily accessible at accouterments stores.)
GGC has abundant balance capacity–it could calmly install 25,000 systems annually, as it has all the all-important accessories and can calmly appoint and alternation installers. Accordingly, GGC is because amplification into the eastern suburbs, area the homeowners are beneath wealthy. In accomplished years, both GGC and BLG accept installed several hundred systems in the eastern suburbs but about their sales efforts are met with the acknowledgment that the systems are too expensive. GGC has assassin you to acclaim a appraisement action for both the western and eastern suburb markets for this advancing season. You accept estimated two audible appeal functions, as follows:
Qw =2100 – 6.25Pgw + 3Pbw + 2100Ag - 1500Ab + 0.2Yw
for the western bazaar and
Qe = 36620 - 25Pge + 7Pbe + 1180Ag - 950Ab + 0.085Ye
for the eastern market, area Q refers to the cardinal of units sold; P refers to amount level; A refers to announcement budgets of the firms (in millions); Y refers to boilerplate disposable assets levels of the abeyant customers; the subscripts w and e accredit to the western and eastern markets, respectively; and the subscripts g and b accredit to GGC and BLG, respectively. GGC expects to absorb $1.5 actor (use Ag = 1.5) on announcement this advancing year and expects BLG to absorb $1.2 actor (use Ab = 1.2) on advertising. The boilerplate domiciliary disposable assets is $60,000 in the western suburbs and $30,000 in the eastern suburbs. GGC does not apprehend BLG to change its amount from aftermost year because it has already broadcast its bright brochures (with the $2,100 amount stated) in both suburbs, and its TV bartering has already been produced. GGC’s amount anatomy has been estimated as TVC = 750Q + 0.005Q2, area Q represents distinct backyard watering systems.
Show all of your calculations and processes. Describe your acknowledgment for anniversary account beneath in complete sentences, whenever it is necessary.
Derive the appeal curves for GGC’s artefact in anniversary market.
Derive GGC’s bordering acquirement (MR) and bordering amount (MC) curves in anniversary market. Show graphically GGC’s demand, MR, and MC curves for anniversary market.
Derive algebraically the quantities that should be produced and sold, and the prices that should be charged, in anniversary market.
Calculate the amount elasticities of appeal in anniversary bazaar and altercate these in affiliation to the prices to be answerable in anniversary market.
Add a abbreviate agenda to GGC administration analogue any anxiety and abilities you may accept apropos your amount recommendations.
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