Question

In: Economics

An aluminum producer acts as a monopolist who sells aluminum to an airplane manufacturer. The airplane...

  1. An aluminum producer acts as a monopolist who sells aluminum to an airplane manufacturer. The airplane manufacturer is also a monopolist. Demand for airplanes is given by P=30-.5Q with price in millions of dollars. The marginal cost of producing aluminum is $1 million. Exactly one unit of aluminum is required to make one airplane. The marginal cost of producing an airplane for the plane manufacturer is the price of aluminum plus $2 million.

  1. The aluminum producer sets the price of aluminum sold to the airplane manufacturer first and the airplane producer sets the price of airplanes second. What will be the price of aluminum and airplanes? How many airplanes are sold? (7 points)

  1. If the supply chain could coordinate to maximize joint profit, what would be the price and quantity of airplanes sold? (5 points)

Solutions

Expert Solution


Rahul Sunny answered 1 year ago
Next > < Previous

Related Solutions

Consider a supply chain where a manufacturer sells to a distributor who sells to a wholesaler who sells to a retailer.
Bullwhip Effect:Consider a supply chain where a manufacturer sells to a distributor who sells to a wholesaler who sells to a retailer. Last year, the retailer's weekly variance of demand was 4000 units. The weekly variance of orders was 5000; 8000; 12,000; and 17,000 units for the retailer, wholesaler, distributor, and manufacturer, respectively. (Note that the variance of orders equals the variance of demand for that firm's supplier.)(a)               Calculate the bullwhip measure for the retailer.(b)               Calculate the bullwhip measure for...
Alcoa is the world's leading producer of primary aluminum, fabricated aluminum, and alumina. The following is...
Alcoa is the world's leading producer of primary aluminum, fabricated aluminum, and alumina. The following is a press release from the company: Alcoa Announces 33% Increase in Base Dividend, 2-for -1 Stock Split PITTSBURGH—Alcoa today announced that its Board of Directors approved a base quarterly dividend increase of 33.3%. Alcoa's announcement indicated that the new quarterly dividend would be 25 cents per share. It also stated that the Board of Directors declared a two-for-one stock split and reaffirmed its commitment...
1, One feature of a monopoly is that the monopolist is: A, a producer of products...
1, One feature of a monopoly is that the monopolist is: A, a producer of products with many close substitutes B, a price maker C, a price taker D, one of several producers of a product 2, Which of the following is true? A, For a perfectly competitive seller marginal revenue is always constant, but for a monopolist marginal revenue increases as it sells more output B, Marginal revenue is always constant for both, a monopolist and a perfectly competitive...
Do you think the monopolist acts as profit maximizing ( price , cost ) ? illustrate...
Do you think the monopolist acts as profit maximizing ( price , cost ) ? illustrate your answer with graph.
How does the monopolist outcome for society compared to that of a perfectly competitive producer in...
How does the monopolist outcome for society compared to that of a perfectly competitive producer in the long run? Discuss two ‘inefficiencies’.
Krandolph Metals, Inc., is a manufacturer of aluminum cans for the beverage industry. Krandolph purchases aluminum...
Krandolph Metals, Inc., is a manufacturer of aluminum cans for the beverage industry. Krandolph purchases aluminum and other raw materials from several vendors. The purchasing process at Krandolph occurs as follows: When inventory of any raw material seems low, a purchasing agent examines the records to determine the vendor who supplied the last purchase of that raw material. The purchasing agent prepares a three‐copy PO and mails the top copy to the vendor. One copy is filed in the purchasing...
Krandolph Metals, Inc., is a manufacturer of aluminum cans for the beverage industry. Krandolph purchases aluminum...
Krandolph Metals, Inc., is a manufacturer of aluminum cans for the beverage industry. Krandolph purchases aluminum and other raw materials from several vendors. The purchasing process at Krandolph occurs as follows: When inventory of any raw material seems low, a purchasing agent examines the records to determine the vendor who supplied the last purchase of that raw material. The purchasing agent prepares a three ‐ copy PO and mails the top copy to the vendor. One copy is filed in...
suppose that the hotel acts as a monopolist whose manager chooses what quantity q of rooms...
suppose that the hotel acts as a monopolist whose manager chooses what quantity q of rooms to offer for rent. We want to determine the hotel’s optimal choice of quantity on game days. Consider a hotel which can supply an unlimited number of hotel rooms at the constant marginal cost c = 20 per room per night, so that the hotel’s total cost function is given by C(q) = 20q.1 Assume that demand for hotel rooms in Tallahassee takes two...
Consider a monopolist who has a cost function of ?(?)=???. This monopolist faces two consumers, the...
Consider a monopolist who has a cost function of ?(?)=???. This monopolist faces two consumers, the first having demand ??(??)=??−?? and the second having demand ??(??)=??−??. a) Calculate the profit-maximizing price and then the optimal quantity sold to each consumer under uniform pricing, i.e. the monopolist charges the same price for both consumers. What are the monopolist’s profits? b) Suppose now that the monopolist can engage in third degree price discrimination. Find the monopolists profit maximizing prices for consumers 1...
Consider a monopolist who has a cost function of ?(?)=???. This monopolist faces two consumers, the...
Consider a monopolist who has a cost function of ?(?)=???. This monopolist faces two consumers, the first having demand ??(??)=??−?? and the second having demand ??(??)=??−??. a) Calculate the profit-maximizing price and then the optimal quantity sold to each consumer under uniform pricing, i.e. the monopolist charges the same price for both consumers. What are the monopolist’s profits? b) Suppose now that the monopolist can engage in third degree price discrimination. Find the monopolists profit maximizing prices for consumers 1...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT