Expected price per product, Managerial Economics

 

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

 

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

Part 2:

Price per plane

(million $)              Probability

-------------------------------------------

125                        .25

175                     .25

225                        .50

 

The estimated price per plane is given as a weighted average of all possible prices, where the weights are given by the respective probabilities of each price

So expected price per plane = (125*0.25)+(175*0.25)+(225*0.5) = $187.5 million

 

Posted Date: 7/13/2012 4:08:15 AM | Location : United States







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