Question

Seven years ago, you started a crosstown delivery service. The service is an environmentally friendly business and, given all the traffic congestion, you are also the fastest service in the city since your entire crew are bicyclists. You have two types of service. You have a small parcel service for anything that is flat and measures less than 11x17. You have a package service using a 100 lb. capacity bike trailer for anything weighing up to 10 lbs. As a way to introduce the new package service when you implemented the small package service, you charged the same price for packages as parcels. You are now wondering if you should charge different prices for the parcel and package service.

Complete the table below for the parcels market.

Price	Parcels	TR	MR	TC	MC	MR-MC	Profit
100	0	0		1,150
90		4,500	90	1,650	10	80	2,850
	100	8,000	70	2,150	10	60	5,850
70	150	10,500	50	2,650	10	40	7,850
60	200	12,000	30	3,150	10	20
50		12,500	10	3,650	10	0	8850
	300	12,000	-10	4,150	10	-20	7850
30	350	10,500	-30	4,650	10	-40
20		8,000	-50	5,150	10	-60	2850
	450	4,500	-70	5,650	10	-80	-1,150

Answer 1

The table of costs:

  

Calculation:

Profit in the first cell = -1150. Calculation: TR - TC = 0 - 1150 = -1150 (loss of $1150)

1. Price= TR/ number of parcels. So, when TR = 8000, and parcels = 100, price = 8000/100 = 80.

2. Parcels = TR/ Price. So when TR = 4500, and price= 90, parcels = 4500/ 90 = 50.

3. Profit = TR - TC. So, when TR = 12,000, andd TC = 3150, profit = 12,000 - 3150 = 8850.

MR MC MR-MC Profit 80 Price 100 90 80 70 60 50 40 30 20 10 Parcels 0 50 100 150 200 250 300 350 400 450 TR 0 4,500 8,000 10,500 12,000 12,500 12,000 10,500 8,000 4,500 90 70 50 30 10 -10 -30 -50 -70 TC 1,150 1,650 2,150 2,650 3,150 3,650 4,150 4,650 5,150 5,650 10 10 10 10 10 10 10 10 10 60 40 20 0 -20 -40 2,850 5,850 7,850 8,850 8850 7850 5,850 2850 -1,150 -60 -80