Hello I'm looking for someone to review my answer to this question and provide feedback (the date is at the end) Suppose that prices are set only once but each newspaper has complete flexibility as to what price to charge (rounded off to the nearest penny) What price do you expect the Post to charge And what price should the Daily News charge Explain Assume that the demand of the NY Post is dependent on both the price of the NY Post and the Daily news This can be modeled by the function Q P f(P P ) g(P N ) a Where P p is the price of the NY Post and P N is the price of the Daily News The demand function of the Daily News can similarly be modeled by 911 Q N h(P N ) i(P P ) b The values below show the circulation (demand) of the 2 papers at the different price points The first table shows the average circulation based on the paper's own price The second and third tables show the circulation considering both the paper's own price and that of their competitors Average Circulation of Papers (in thousands) Price Circulation Daily News 25 1026 50 770 NY Post 25 672 50 458 Average Circulation of Daily News (in thousands) Price of NY Post 25 50 Price of Daily news 25 995 1192 50 565 808 Average Circulation of NY Post (in thousands) Price of NY Post 25 50 Price of Daily news 25 651 252 50 946 551 To determine the portion of the demand function dependent on the paper's own price, we can use the data in table 1 to estimate the function by calculating the slope and intercept For the NY Post, this yields f(P p ) (458 672) ( 50 25) 856 P p Similarly, for the Daily News h(P N ) (770 1026) ( 50 25) 1024 P N To determine the cross price demand, we can hold the paper's own price constant and use the demand when the opposing paper varies their price to determine the cross price portion of the demand For example, when the NY post is held at 50 cents g(P N ) (551 252) ( 50 25) 1196 P N Similarly for the Daily News at 50 cents i(P P ) (808 565) ( 50 25) 972 P p Thus, the demand function for the NY Post is Q P 856 P p 1196 P N a Inputting known prices, we can solve for a (using both prices at 25 cents) 651 856 25 1196 25 a therefore a 566 Thus, the demand function for the NY Post can be assumed as Q P 566 856 P p 1196 P N Similarly, the demand function for the Daily News can be calculated as Q N 1008 1024 P N 972 P p Using the above demand functions, we can calculate the inverse demand and revenue functions as P P 0 66 1 4 P N (Q P 856) R P 0 66Q P 1 4 P N Q P (Q P 2 856) P N 984 949 P P (Q N 1024) R N 984Q N 949 P P Q N (Q N 2 1024) Thus, the marginal revenue functions are MR P 0 66 1 4 P N (Q P 428) MR N 984 949 P P (Q N 512) Setting that equal to the Marginal Cost of 20 cents (for the Post) yields the demand and inverse demand functions for optimal price as Q P 225 583 P N P P 0 66 1 4 P N (225 583 P N ) 856 0 39 0 7 P N Using the same procedure for the Daily News and a Marginal Cost of 21 cents, we get Q N 396 29 485 89 P P P N 984 949 P P ( 387 475 P P ) 597 474 P P Plugging P N into the optimal price function for the NY Post yields an optimal price of $1 27 P P 0 39 0 7 ( 597 474 P P ) $1 27 Using the Post's optimal price of $1 27, yields an optimal price for the Daily News of $1 20 P N 597 474 1 27 $1 20 here is the data NYC tabloid market price, circulation and advertising revenue Price (cents) Circulation (000) Advertising revenue ($000) Circulation revenue (000) Total revenue Fixed costs Variable costs Depreciation costs EBITDA Account profit avregen profit Week D News NY Post D News NY Post D News NY Post D News NY Post D News NY Post D News NY Post D News NY Post D News NY Post D News NY Post D News NY Post D News NY Post 1 50 50 847 569 486 461 423 284 909 745 525 525 110 68 68 45 274 152 206 106 207 80 2 50 50 843 585 507 445 422 293 929 738 525 525 110 70 67 47 294 143 227 96 3 50 50 815 529 534 447 408 264 942 711 525 525 106 63 65 42 311 123 245 80 4 50 50 842 575 507 479 421 287 928 766 525 525 109 69 67 46 293 173 226 127 5 50 50 791 574 471 416 395 287 866 703 525 525 103 69 63 46 239 109 175 63 6 50 50 795 547 486 442 397 274 883 716 525 525 103 66 64 44 255 125 192 81 7 50 50 776 516 487 405 388 258 875 663 525 525 101 62 62 41 249 76 187 35 8 50 50 788 532 497 440 394 266 891 706 525 525 102 64 63 43 263 117 200 75 9 50 50 780 520 478 401 390 260 869 661 525 525 101 62 62 42 242 74 180 32 10 50 50 804 555 506 441 402 278 908 719 525 525 105 67 64 44 279 127 214 83 11 50 50 804 559 513 457 402 279 915 736 525 525 105 67 64 45 286 144 222 99 12 50 25 548 912 340 642 274 228 614 870 525 525 71 109 44 73 17 235 26 162 22 183 13 50 25 582 979 426 680 291 245 717 925 525 525 76 117 47 78 116 282 70 204 14 25 25 1057 697 613 488 264 174 878 663 525 525 137 84 85 56 215 54 131 2 110 2 15 25 25 999 661 581 512 250 165 831 677 525 525 130 79 80 53 176 72 96 20 16 25 25 951 582 588 455 238 145 826 600 525 525 124 70 76 47 177 5 101 41 17 25 25 999 648 620 502 250 162 870 664 525 525 130 78 80 52 215 61 135 9 18 25 25 984 655 575 469 246 164 821 633 525 525 128 79 79 52 168 29 89 23 19 25 25 1009 618 567 502 252 154 819 657 525 525 131 74 81 49 163 57 82 8 20 25 25 1049 665 616 486 262 166 878 652 525 525 136 80 84 53 217 48 133 6 21 25 25 996 680 616 489 249 170 865 659 525 525 130 82 80 54 210 53 131 2 22 25 25 1057 617 631 510 264 154 895 665 525 525 137 74 85 49 233 66 148 16 23 25 25 1020 673 609 507 255 168 864 675 525 525 133 81 82 54 207 69 125 16 24 25 25 1008 662 653 510 252 165 905 675 525 525 131 79 81 53 249 71 169 18 25 25 25 1018 653 592 487 255 163 846 651 525 525 132 78 81 52 189 47 108 5 26 25 25 1026 652 590 521 256 163 846 684 525 525 133 78 82 52 188 81 106 29 27 25 50 1210 235 703 244 302 118 1006 361 525 525 157 28 97 19 323 192 227 211 206 193 28 25 50 1227 274 684 268 307 137 991 405 525 525 159 33 98 22 306 153 208 175 29 25 50 1167 250 680 246 292 125 972 371 525 525 152 30 93 20 295 184 202 204 30 25 50 1178 240 698 249 295 120 993 369 525 525 153 29 94 19 315 185 221 204 31 25 50 1180 262 651 275 295 131 946 406 525 525 153 31 94 21 268 150 173 171 32 25 25 988 663 619 539 247 166 866 704 525 525 128 80 79 53 213 100 134 47 33 25 25 954 641 570 515 238 160 808 675 525 525 124 77 76 51 159 74 83 22 34 25 25 996 616 583 446 249 154 832 600 525 525 129 74 80 49 177 1 98 49 35 25 25 994 701 589 506 248 175 837 682 525 525 129 84 79 56 183 72 103 16 36 25 25 989 669 586 504 247 167 833 671 525 525 129 80 79 53 179 66 100 13 37 25 25 961 616 552 439 240 154 792 593 525 525 125 74 77 49 142 6 65 56 38 25 25 1052 687 681 493 263 172 944 664 525 525 137 82 84 55 282 57 198 2 39 25 25 980 590 601 462 245 147 847 610 525 525 127 71 78 47 194 14 116 33 40 25 25 942 657 548 476 235 164 784 641 525 525 122 79 75 53 136 37 61 16 41 25 25 961 685 564 516 240 171 804 688 525 525 125 82 77 55 154 80 77 26 42 25 25 985 631 595 503 246 158 841 661 525 525 128 76 79 50 188 60 109 10 43 25 25 960 659 581 502 240 165 821 667 525 525 125 79 77 53 171 63 94 10 44 25 25 963 652 548 532 241 163 789 695 525 525 125 78 77 52 138 92 61 40 45 25 25 967 660 590 482 242 165 831 647 525 525 126 79 77 53 181 43 103 10

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Hello I'm looking for someone to review my answer to this question and provide feedback. (the date is at the end) Suppose that prices are

Hello I'm looking for someone to review my answer to this question and provide feedback. (the date is at the end)

Suppose that prices are set only once but each newspaper has complete flexibility as to what price to charge (rounded off to the nearest penny). What price do you expect the Postto charge? And what price should the Daily Newscharge? Explain.

Assume that the demand of the NY Post is dependent on both the price of the NY Post and the Daily news. This can be modeled by the function:

Q_P = f(P_P)+ g(P_N) + a

Where P_pis the price of the NY Post and P_N is the price of the Daily News. The demand function of the Daily News can similarly be modeled by:911

Q_N = h(P_N) + i(P_P) + b

The values below show the circulation (demand) of the 2 papers at the different price points. The first table shows the average circulation based on the paper's own price. The second and third tables show the circulation considering both the paper's own price and that of their competitors

Average Circulation of Papers (in thousands)

	Price	Circulation
Daily News	25	1026
50	770
NY Post	25	672
50	458

Average Circulation of Daily News (in thousands)

		Price of NY Post
		25	50
Price of Daily news	25	995	1192
50	565	808

Average Circulation of NY Post (in thousands)

		Price of NY Post
		25	50
Price of Daily news	25	651	252
50	946	551

To determine the portion of the demand function dependent on the paper's own price, we can use the data in table 1 to estimate the function by calculating the slope and intercept. For the NY Post, this yields:

f(P_p) = (458-672)/(.50-.25) = -856* P_p

Similarly, for the Daily News:

h(P_N) = (770-1026)/(.50-.25) = -1024* P_N

To determine the cross-price demand, we can hold the paper's own price constant and use the demand when the opposing paper varies their price to determine the cross-price portion of the demand. For example, when the NY post is held at 50 cents:

g(P_N) = (551-252)/(.50-.25) = 1196* P_N

Similarly for the Daily News at 50 cents:

i(P_P) = (808-565)/(.50-.25) = 972* P_p

Thus, the demand function for the NY Post is:

Q_P = -856* P_p+ 1196* P_N+ a

Inputting known prices, we can solve for a (using both prices at 25 cents)

651 = -856*.25 + 1196*.25 + a; therefore a = 566

Thus, the demand function for the NY Post can be assumed as:

Q_P = 566 - 856*P_p+ 1196*P_N

Similarly, the demand function for the Daily News can be calculated as:

Q_N = 1008 - 1024*P_N+ 972* P_p

Using the above demand functions, we can calculate the inverse demand and revenue functions as:

P_P = 0.66+1.4*P_N-(Q_P/856)

R_P = 0.66Q_P+1.4*P_N*Q_P-(Q_P²/856)

P_N = .984+.949*P_P-(Q_N/1024)

R_N = .984Q_N+.949*P_P*Q_N-(Q_N²/1024)

Thus, the marginal revenue functions are

MR_P = 0.66+1.4*P_N-(Q_P/428)

MR_N = .984+.949*P_P-(Q_N/512)

Setting that equal to the Marginal Cost of .20 cents (for the Post) yields the demand and inverse demand functions for optimal price as:

Q_P =225+583*P_N

P_P = 0.66+1.4*P_N-(225+583*P_N)/856=0.39+0.7*P_N

Using the same procedure for the Daily News and a Marginal Cost of .21 cents, we get:

Q_N =396.29+485.89*P_P

P_N = .984+.949*P_P-(.387+.475*P_P) = .597+.474*P_P

Plugging P_N into the optimal price function for the NY Post yields an optimal price of $1.27.

P_P =0.39+0.7*(.597+.474*P_P)=$1.27

Using the Post's optimal price of $1.27, yields an optimal price for the Daily News of $1.20

P_N =.597+.474*1.27 = $1.20

here is the data:

NYC tabloid market: price, circulation and advertising revenue

	Price (cents)		Circulation (000)		Advertising revenue ($000)		Circulation revenue (000)		Total revenue		Fixed costs		Variable costs		Depreciation costs		EBITDA		Account profit		avregen profit
Week	D News	NY Post	D News	NY Post	D News	NY Post	D News	NY Post	D News	NY Post	D News	NY Post	D News	NY Post	D News	NY Post	D News	NY Post	D News	NY Post	D News	NY Post
1	50	50	847	569	486	461	423	284	909	745	-525	-525	-110	-68	-68	-45	274	152	206	106	207	80
2	50	50	843	585	507	445	422	293	929	738	-525	-525	-110	-70	-67	-47	294	143	227	96
3	50	50	815	529	534	447	408	264	942	711	-525	-525	-106	-63	-65	-42	311	123	245	80
4	50	50	842	575	507	479	421	287	928	766	-525	-525	-109	-69	-67	-46	293	173	226	127
5	50	50	791	574	471	416	395	287	866	703	-525	-525	-103	-69	-63	-46	239	109	175	63
6	50	50	795	547	486	442	397	274	883	716	-525	-525	-103	-66	-64	-44	255	125	192	81
7	50	50	776	516	487	405	388	258	875	663	-525	-525	-101	-62	-62	-41	249	76	187	35
8	50	50	788	532	497	440	394	266	891	706	-525	-525	-102	-64	-63	-43	263	117	200	75
9	50	50	780	520	478	401	390	260	869	661	-525	-525	-101	-62	-62	-42	242	74	180	32
10	50	50	804	555	506	441	402	278	908	719	-525	-525	-105	-67	-64	-44	279	127	214	83
11	50	50	804	559	513	457	402	279	915	736	-525	-525	-105	-67	-64	-45	286	144	222	99
12	50	25	548	912	340	642	274	228	614	870	-525	-525	-71	-109	-44	-73	17	235	-26	162	22	183
13	50	25	582	979	426	680	291	245	717	925	-525	-525	-76	-117	-47	-78	116	282	70	204
14	25	25	1057	697	613	488	264	174	878	663	-525	-525	-137	-84	-85	-56	215	54	131	-2	110	2
15	25	25	999	661	581	512	250	165	831	677	-525	-525	-130	-79	-80	-53	176	72	96	20
16	25	25	951	582	588	455	238	145	826	600	-525	-525	-124	-70	-76	-47	177	5	101	-41
17	25	25	999	648	620	502	250	162	870	664	-525	-525	-130	-78	-80	-52	215	61	135	9
18	25	25	984	655	575	469	246	164	821	633	-525	-525	-128	-79	-79	-52	168	29	89	-23
19	25	25	1009	618	567	502	252	154	819	657	-525	-525	-131	-74	-81	-49	163	57	82	8
20	25	25	1049	665	616	486	262	166	878	652	-525	-525	-136	-80	-84	-53	217	48	133	-6
21	25	25	996	680	616	489	249	170	865	659	-525	-525	-130	-82	-80	-54	210	53	131	-2
22	25	25	1057	617	631	510	264	154	895	665	-525	-525	-137	-74	-85	-49	233	66	148	16
23	25	25	1020	673	609	507	255	168	864	675	-525	-525	-133	-81	-82	-54	207	69	125	16
24	25	25	1008	662	653	510	252	165	905	675	-525	-525	-131	-79	-81	-53	249	71	169	18
25	25	25	1018	653	592	487	255	163	846	651	-525	-525	-132	-78	-81	-52	189	47	108	-5
26	25	25	1026	652	590	521	256	163	846	684	-525	-525	-133	-78	-82	-52	188	81	106	29
27	25	50	1210	235	703	244	302	118	1006	361	-525	-525	-157	-28	-97	-19	323	-192	227	-211	206	-193
28	25	50	1227	274	684	268	307	137	991	405	-525	-525	-159	-33	-98	-22	306	-153	208	-175
29	25	50	1167	250	680	246	292	125	972	371	-525	-525	-152	-30	-93	-20	295	-184	202	-204
30	25	50	1178	240	698	249	295	120	993	369	-525	-525	-153	-29	-94	-19	315	-185	221	-204
31	25	50	1180	262	651	275	295	131	946	406	-525	-525	-153	-31	-94	-21	268	-150	173	-171
32	25	25	988	663	619	539	247	166	866	704	-525	-525	-128	-80	-79	-53	213	100	134	47
33	25	25	954	641	570	515	238	160	808	675	-525	-525	-124	-77	-76	-51	159	74	83	22
34	25	25	996	616	583	446	249	154	832	600	-525	-525	-129	-74	-80	-49	177	1	98	-49
35	25	25	994	701	589	506	248	175	837	682	-525	-525	-129	-84	-79	-56	183	72	103	16
36	25	25	989	669	586	504	247	167	833	671	-525	-525	-129	-80	-79	-53	179	66	100	13
37	25	25	961	616	552	439	240	154	792	593	-525	-525	-125	-74	-77	-49	142	-6	65	-56
38	25	25	1052	687	681	493	263	172	944	664	-525	-525	-137	-82	-84	-55	282	57	198	2
39	25	25	980	590	601	462	245	147	847	610	-525	-525	-127	-71	-78	-47	194	14	116	-33
40	25	25	942	657	548	476	235	164	784	641	-525	-525	-122	-79	-75	-53	136	37	61	-16
41	25	25	961	685	564	516	240	171	804	688	-525	-525	-125	-82	-77	-55	154	80	77	26
42	25	25	985	631	595	503	246	158	841	661	-525	-525	-128	-76	-79	-50	188	60	109	10
43	25	25	960	659	581	502	240	165	821	667	-525	-525	-125	-79	-77	-53	171	63	94	10
44	25	25	963	652	548	532	241	163	789	695	-525	-525	-125	-78	-77	-52	138	92	61	40
45	25	25	967	660	590	482	242	165	831	647	-525	-525	-126	-79	-77	-53	181	43	103	-10