Determine the optimum prices and outputs-probability, Macroeconomics

Given the following:

Airbus Boeing
Demand P = 182.868 - 0.0003Q P = 198.6592 - 0.00013Q
TVC Curve TVC = 104.8822Q - 0.001Q^2 + 0.09Q^3 TVC = 25.8678Q - 0.00023Q^2 + 0.4Q^3

In addition, the joint group analysis determined the market would bear a price per plane somewhere within the following parameters:

Table 1
Price per plane
(million $) Probability
125 .25
175 .25
225 .5

1. First estimate the price per plane using the estimated prices and probabilities given in Table 1.

2. Determine the optimum prices and outputs for both Airbus and Boeing if they decide to proceed individually without collaborating in the development of the VLCT. Use the Demand and AVC equations outlined above in this analysis. Determine the profitability of this approach for each of the companies if the Fixed Costs are $500 million and $700 million for Airbus and Boeing, respectively.

3. Now analyze the potential for a collaborative approach by Airbus and Boeing. Assume there is a 50% probability that each of the companies' estimates is accurate in the Demand and Cost equations provided above. (Multiply both the demand and cost curves for each of the entities by 0.5, add them together. Then use that result to determine optimum price/quantity levels if they collaborate.) Also determine profitability assuming that the joint Fixed Cost is $600 million.

4. Finally, summarize the results of your analysis and make a recommendation about what you consider the most appropriate process for Airbus and Boeing to use in the development of the VLCT equipment. It is recommended that you use an Excel® spreadsheet to summarize the results. It might also be useful to construct an Excel® section for the quadratic formula that will be required for the analysis.

Posted Date: 3/25/2013 2:11:58 AM | Location : United States







Related Discussions:- Determine the optimum prices and outputs-probability, Assignment Help, Ask Question on Determine the optimum prices and outputs-probability, Get Answer, Expert's Help, Determine the optimum prices and outputs-probability Discussions

Write discussion on Determine the optimum prices and outputs-probability
Your posts are moderated
Related Questions
#“Nominal GDP declined between 2008 and 2009, therefore the GDP deflator must also have declined.”

Neo-classical thinking on growth: Neo-classical  thinking  on  growth  is  owed  to  the Robert  Solow  whose  exogenous  growth models in the of the mid-20th century remained


Discuss the concept of dynamic multiplier.

Society seeks for monopolists to operate at the point where _______ = MC which is the lowest point on the ATC curve (the most efficient). A) D B) ATC C) MR D) AVC

Relation between nominal interest rate, real interest rate and inflation If we denote the nominal interest rate by R, the real rate by r and the expected inflation by p e then

What are the trends of labour and capital as macrfoeconomics variables?

ihave real gdp per capita for all countries in world .. how can i calculate world real gdp per capita by using the data.

Use the following data on a firm's total cost schedules to calculate its average variable cost, average fixed cost, average total cost, and marginal cost schedules. Output Total

Derive the following equilibrium for the IS-LM model: