economics
. a. Using the given information, create the above table in Excel. Use formulas to find the missing values and fill the table completely (use the definitions of these costs). . b. After finding all values in the worksheet, determine what the profit-maximizing quantity Q* is for Taylor's firm. How can you tell? . C. Plot the data. In one plot, show the Demand curve (a function of Q), and constant MC. Remember how I showed you to find MR(Q), add MR(Q) for Q=[0, 10]. Identify areas of consumer surplus, profits, and total costs. Paste this plot into your write up. Hint: remember, TR(Q) is P*Q, so MR(Q) is the derivative of the total revenue function. . d. Write the profit function (in math). In a separate plot, show profits as a function of quantity produced over Q=[0,14] (that is, the profit function). Paste this into your write up. At what Q" does the profit curve peak - that is, what is the profit-maximizing quantity? . e. Give me examples of fixed, variable, and implicit costs that Taylor might incur in this business? 3. When Apple introduced its first iPhone, it had few competitors and so it set a price of $500 when its unit cost was $350, The economics consulting firm it hired to estimate the demand elasticity confirmed this was the optimal price. Since then, entry into the mobile market has occurred that makes customers more price-conscious. When it brought the economics consulting firm back to estimate the demand price elasticity, it found that demand had become more price elastic at -4. Also, Apple has lowered its unit cost to $300 by finding cheaper labor . a. What price should Apple charge now?ail . b. Are there any other elasticities Apple should consider as it sets a new price? 4. Suppose Jake, Jobu, and Jonathan own a craft brew startup, J. Brew, selling homemade beer. Their unit cost is constant at MC=$2.70 per bottle. The last time they raised the price 1%, it resulted in a 1.90% change in quantity demanded. They are currently charging $5 for a beer. . a. Should they adjust their price from $5? What is the optimal price? . b. Now suppose the price of spring water goes up, increasing their MC to $2.95. What is the new optimal price? 5. Two of the UK's larger wine distribution companies, Bibendum and PLB, merged their businesses in October 2014, Bibendum is primarily a restaurant supplier while PLB focuses on supplying wines to retailers. Does this suggest a means through which the merger might create value-added? Hint in your response, consider both economies of scale and scope for the new firm structure. be 6 Imagine you are a commodities analyst modeling the market for coffee beans. We have the following model for the (competitive) market for Arabica coffee: let the demand function be P-140-40, and the supply function is P=2+20. Price is measured in Euros E and coffee is measured in millions of
