Question

Use following information to answer 36-40 Sal's satellite company broadcasts TV to subscribers in Los Angeles and New York. The demand functions for each of these two groups are = 150-0.75PNY QLA=80-0.25PLA QNY where Q is in thousands of subscriptions per year and P is the subscription price per year. The cost of providing Q units of service is given by C 1000+ 40Q where Q = QNY +QLA 36. What are the profit-maximizing price and quantity for the New York? A. $180, 35 B. $180, 60 C. $120, 35 D. $120, 60 single price. What price should he charge, and what quantities will he sell 37. Suppose Sal can in New York? charge only A. $150, 48.75 B. $150, 95 C. $135, 48.75 D. $135, 95 38. Suppose Sal's satellite company split to two individual companies, SalNY and SalL.A. What will be the price and quantity for SalNY in the long run if they compete with cach other by choosing quantity? A. $103.34. 63.33 B. $103.34, 95 C. $87.5, 63.33 D. $87.5, 95 39. Suppose Sal's satellite company split to two individual companies, SalNY and Sall.A. What will be the price and quantity for SalNY in the long run if SalNY can choose first? A. $103.34, 47.5 B. $103.34, 95 C. $87.5, 47.5 D. $87.5, 95 40. Suppose Sal's satellite company split to two individual companies, SalNY and Sall.A. What will be the price and quantity for SalNY in the long if they compete with each other by choosing price? run A. $87.5, 47.5 B. $87.5, 95 C. $40, 47.5 D. $40, 95

Answer 1

Quistom Jollowima /ovmation to Answiv 36-40 Sal's Satellte ony bvo ad Kas Amals ond Nus Yovk. th o u ond funchons fov lath d thise two qvoupi Are: los Tv to Subscvibivs LA 80-0.2sPe 150 o.75 Py tohir &is i thousonds of Subsivintions pev Vear ond Pis the Substvinton pvic pev Year th (ast providng dSivivite units Ll000 +40 whive &OytA givw by Answirs: the vts problun 36 C150-)- l000 -4o & 2 Q So 77 4o o o 75 bo, P- 120 Prie Chargud iS 120,quontity pvo duted is bo CSScanned with CamScanner

the nus dunon d urve is 37 Ny OLA P 230 QNy LA - 230- P The its pvobl 230 (Oy+BLA ) ONYt C230- (Swyt@LA OLA -l000-40(Oyt) T2 Qy t 26LA 190 > T 2 A 2 y Obl & couse d Symmi try, Oy= A =49-5 A+ thise quontiHes rice is P- 230 95 ニ135 Price chargud is 125, quotity prooulcd is 49.5 CS Scanned with CamScanner

(38) lourmout Comne ttion: Εvww ' ργοliuw. (ONy LA) ONy- lo00-oly C230 230 2NY QLA > 190-LA NY 2 Sinmilovly ivm problun CNY LA) QLA 2CS Go QLA C230 T12 looo >n230 -2OLA OAry40 190-NY QLA Hence, bust Rusponse lunitions d the two livms Ave o othev cois LA190 -0b1 190-NY ny190 o ohev ewis the tuo equations Solving to obtaim quontitis Sold by the too livms 2 Y90 o- 2 -> AY63-33 cs Scanned with CamScanner

Bysymme try 6233 prices thavgud by both livms at these pvices A av P- 23o (126. 61 lo3 33 Price chovg d is lo3 31 uon tity vo du (edis 62-33- 2 ta ckelbev Conpti ton moviv ond Acts os a Monopolist, Fivmis the livst igmovimg livm2s Reaction T, C230-Oy) ONy lo0o -40y T 230 -2Y-40 = 0 95 Fivm 2s bst uponse irv s the Some os theprvious navt BR,190 -O ONY190,o othevwise 2 Cs Scanned with CamScanner

imtt the Comdition /vm i's quontity is Satifivd the amav ket 2 will prooute Fivm 2s pvodu ction is: 190 95 QLA ->e45 2. uontitis is Price un the mavket at theSe Pa 230 -(95 +47.5) =81-S Price Chonqud by livais 8S ond quoutty produted is 95 units CS Scanned with CamScanner