Determine the optimum prices and outputs-probability, Macroeconomics

Assignment Help:

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.


Related Discussions:- Determine the optimum prices and outputs-probability

Effect of distance on completed, From stock and watson 3rd edition introduc...

From stock and watson 3rd edition introduction to econometrics Using the data set CollegeDistance described, run a regression of years of completed education (ED) on distance to t

Illustrate aspect depends on producers and consumers surplus, Illustrate th...

Illustrate the aspect depends onto producers and consumers surplus. a. How much advantage do producers and consumers receive by the existence of a market? b. How is the welf

Macroeconomics policy, explanations to the short-run fluctuation and pilicy...

explanations to the short-run fluctuation and pilicy prescriptions of the schools macroeconomics thought

HOMEWORK, How do you figure out the answer to this question: You are a stud...

How do you figure out the answer to this question: You are a student at a university. You pay $8,000 per year in tuition, $5,000 per year in living expenses, and $1,000 per year fo

Islm curve, why lm curve upward sloping and is curve downward sloping?

why lm curve upward sloping and is curve downward sloping?

Quiz, To overcome the stagnant growth it was experiencing for the past 10-1...

To overcome the stagnant growth it was experiencing for the past 10-15 years, Japan undertook which of the following measures? Answer Undertook programs to build infrastructure

When ochratoxin molds can occur, Q. When Ochratoxin molds can occur? Oc...

Q. When Ochratoxin molds can occur? Ochratoxin A is a phenylalanyl derivative of a substituted isocoumarin produced by Penicillium verrucosum in temperate climate and by severa

Quote., trying to figure out how this works as I have two classes currently...

trying to figure out how this works as I have two classes currently statistics/economics an

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd