Managerial analysis help- attached is the Excel with 4 questions

1. At Lou's Big City Parking Garage, Lou incurs marginal cost of $1 (MC=$1.00) per Lou engages in cost-plus pricing (i.e. prices for the long run), AVC is also equal to a - 0.7Q, where Q is the number of hours of parking per customer, per day, and P is th Assume, initially, Lou charges a single hourly price. Use this information to answer the questions below. NOTE: For some of these questions, you may want to do the work outside of Excel a. With a single price, how much will Lou charge per hour to maximize profit, and how many hours NOTE: Cost-plus pricing here is consistent with marginal-cost pricing, so follow the MR=MC appro Hours parked per day, per customer Profit-maximizing Price per Hour b. With a single hourly price, what is Lou's markup and profit margin per customer? (2 pts.) c. With a single hourly price, what is Lou's profit per customer, per day? (2 pts.) Note: Enter a formula--using information above--to calculate profit. Suppose Lou is considering an alternative pricing scheme, in which he would charge $6 for the firs $3 for the next four hours of parking, and $1 per hour for the next three hours of parking (Note: Af In other words, Lou would engage in block pricing, a form of second-degree price discrimination. d. Under this pricing scheme, and assuming each customer parks for the same number of hours a of $1 (MC=$1.00) per customer per hour. Because MC is constant, average variable cost (AVC VC is also equal to average total cost (AC). Assume each of Lou's customers has identical de , per day, and P is the price of parking per hour. ork outside of Excel and just put your answer in the text box provided. fit, and how many hours will each customer per day? (4 pts.) follow the MR=MC approach. ustomer? (2 pts.) uld charge $6 for the first three (3) hours of parking, urs of parking (Note: After 10 hours, Lou would charge a fixed, daily rate). e price discrimination. ame number of hours as found above (in a.), what would be Lou's profit per customer, per day? (4 pts.) e variable cost (AVC) is equal to $1, as well, and because mers has identical demand, given by the expression, P = 8.0 r, per day? (4 pts.) 2. You are a manager in a large hotel chain that is about to open a hotel in a new cit customers that will stay at this hotel: tourists and business travelers. You can sepa third-degree price discrimination. To help you determine the profit-maximizing price 50 other cities (these data can be found below). Based on prior research, you know exponential demand function, of the form: Q = APn, where Q is output (number of ni Part I: For each group of customers, run a regression to estimate "n," the price elas NOTE: Since this is an exponential function, you will have to first transform the dat LN(Q) = LN(A) + nLN(P). In this form, the estimated coefficient for the log of P (i.e. "n") will be, in fact, your es you should obtain a negative value from your regression and not omit the minus sig Part II: Use the results of your regressions to answer the question (determining the HINT: Look at Slide 10 of the lecture notes. NOTE: Assume marginal cost for each nightly stay is $50. a. Based on your regression results, enter a formula in the respective boxes below to calculate the NOTE: Round your answers to the nearest dollar. Tourists: Business Travelers: DATA: Tourists Price (per night) 220 202 213 228 225 211 220 198 209 195 203 216 220 212 183 212 220 194 192 230 222 227 207 227 197 183 180 193 223 215 215 211 182 227 196 223 206 205 209 190 224 221 225 208 Nightly Stays per Month (000s) 80 87 78 70 79 81 76 89 82 86 83 84 73 80 102 83 74 97 88 77 82 79 79 76 87 95 104 90 75 75 75 82 98 72 92 75 81 83 82 92 77 76 73 82 197 180 217 205 201 196 94 105 80 82 82 93 n a hotel in a new city. You have been asked to determine the nightly rates that should be cha velers. You can separate (and so identify) members of each group based on advanced bookin ofit-maximizing price for each group, you use a sample of data you have on these same grou research, you know that demand for both groups exhibit constant elasticity. Therefore, in us output (number of nightly stays per month), P is price per night, A is a constant, and "n" is th ate "n," the price elasticity of demand for that group. (4 pts.) rst transform the data into natural logs in order to estimate a linear regression of the form: A) + nLN(P). will be, in fact, your estimate of the price elasticity of demand for that group. ALSO, because " ot omit the minus sign as you do your calculations. ion (determining the profit-maximizing price for each group). es below to calculate the profit-maximizing price for each group of customers. (6 pts.) Business Travelers Price (per night) 330 376 349 286 355 303 363 279 276 253 353 369 255 298 363 317 312 345 356 366 372 284 262 341 283 380 315 296 360 275 346 303 370 277 297 265 363 305 276 278 308 349 292 276 Nightly Stays per Month (000s) 13 11 11 14 9 13 12 16 15 14 11 11 17 15 10 14 11 13 11 9 10 15 17 12 16 11 14 12 10 13 12 13 11 16 13 16 9 13 15 13 12 11 13 13 285 293 261 331 346 296 13 12 15 10 11 13 es that should be charged to the two distinct groups of on advanced booking. Therefore, you plan to implement on these same groups of customers for the hotel chain in city. Therefore, in using the data below, you will assume an onstant, and "n" is the (constant) price elasticity of demand. ssion of the form: up. ALSO, because "n" is the price elasticity of demand, 3. You have just become the manager of a private golf club, and have been asked to previously managed public golf courses and know from experience there are two ty collected (for four years) data on the number of rounds each golfer played that year at the bottom of this problem, in which you have already divided the data into two e consisting of 100 "occasional" golfers (those without a subscription). Along with th round was played. Part I: For each group of 100 golfers, run a regression to estimate a simple demand explanatory variable) is the price per round, and "a" and "b" are the parameters to b Part II: Use the results of your regressions to answer the questions below. NOTE: Assume, for all questions, that the club incurs a constant marginal cost (and a. Based on your regression results, write the general expression for the respective demand equa NOTE: Round the intercept term to the nearest whole number and the coefficient for P to two deci Serious Golfer Demand: Occasional Golfer Demand: Serious Golfers Only: Suppose you want to consider what the club's profit would be b. How much would the club charge for each round of golf? (2 pts.) c. Enter a formula to calculate the annual membership (entry) fee charged to each golfer. (2 pts.) d. You estimate there are 200 "serious" golfers at your new club. Enter a formula to calculate the NOTE: For purposes of this question, assume there are no fixed costs. Attracting Both Types of Golfers: Now consider what the club's profit would be if yo e. How much would the club charge for each round of golf? (2 pts.) NOTE: Round answer to the nearest dollar. f. Enter a formula to calculate the annual membership (entry) fee charged to each golfer. (2 pts.) g. You project the club could attract 800 "occasional" golfers, in addition to the 200 "serious" golf Enter a formula to calculate the club's profit in this case. (2 pts.) NOTE: Again, assume there are no fixed costs. DATA: Serious Golfers Annual Rounds (18 holes each) Price 69 68 64 69 65 68 66 70 68 66 69 68 67 67 64 65 68 65 64 65 67 68 66 68 65 64 67 65 67 66 64 66 64 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 64 62 65 65 67 67 64 63 63 62 65 62 62 68 64 65 63 62 64 59 60 64 65 64 62 60 62 63 63 63 59 61 63 65 64 64 62 63 62 61 63 59 57 60 61 57 61 63 60 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 61 61 61 63 62 61 63 63 63 58 57 63 58 63 62 57 57 58 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 d have been asked to come up with an annual membership (entry) fee as well as a price to ch ence there are two types of golfers: "serious" and "occasional." In fact, you have annual sur olfer played that year as well as whether the golfer had a subscription to the publication, "Gol d the data into two equal groups, one consisting of 100 "serious" golfers (those with a subsc ption). Along with the annual number of rounds for each golfer, you also have the price of a r ate a simple demand equation (i.e. Q = a - bP), where Q (the dependent variable) represents th e the parameters to be estimated by the regression. ions below. nt marginal cost (and therefore, average variable cost) of $10 for each round of golf. espective demand equation (4 pts.) fficient for P to two decimal places (e.g. Q = 56 - 1.34P). club's profit would be if you limited membership to "serious" golfers. to each golfer. (2 pts.) ormula to calculate the club's profit from limiting membership to just this group of golfers. (2 pts.) profit would be if you priced such that you could attract both "serious" and "occasional" go to each golfer. (2 pts.) o the 200 "serious" golfers who are already members. Occasional Golfers Annual Rounds (18 holes each) Price 19 20 20 19 19 20 19 20 20 20 19 20 20 19 19 20 20 19 18 18 19 19 19 18 18 18 18 19 18 19 18 19 19 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 18 18 18 19 19 19 17 17 18 17 18 18 17 18 17 18 18 17 17 17 18 17 18 18 17 17 17 17 17 18 17 17 17 18 17 17 17 17 17 16 17 16 17 17 16 17 16 16 16 22.00 22.00 22.00 22.00 22.00 22.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 16 17 17 17 16 16 16 17 17 16 16 17 16 17 16 17 16 16 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 e as well as a price to charge for each round (18 holes) of golf. You have act, you have annual survey data from your previous job in which you n to the publication, "Golfer's Digest." A sample of the data can be found fers (those with a subscription to "Golfer's Digest"), and the other group also have the price of a round of golf corresponding to the year when the nt variable) represents the number of annual rounds of golf, P (the only h round of golf. of golfers. (2 pts.) us" and "occasional" golfers. 4. A company has two divisions. The first produces an operating system for mobile smartphone. Of course, the company's smartphone runs on its own operating syst the operating-system division is $90, while marginal cost in the smartphone division addition, the price elasticity of demand for this company's smartphone is a constan where P is the price per smartphone, and Q is the quantity of smartphones demande For this entire problem, assume pricing is conducted over the long run (AC = AVC: In answering the questions below, you will consider two scenarios: Part I: No external market for the operating system (the operating-system chips are Part II: The operating system has its own external market, which is given by the inv chips (in millions). NOTE: Use marginal-cost pricing (MR=MC) to determine the operating-system divis cost-plus pricing to determine the price of the company's smartphone. Part I (No External Market for the Operating System): a. What is the profit-maximizing price of a smartphone? (2 pts.) b. Enter the formula to calculate the profit-maximizing quantity of smartphones (in millions). (2 pts c. What is the company's profit (both divisions combined), in millions? (2 pts.) Part II (External Market for the Operating System): a. Calculate the profit-maximizing quantity (in millions) and price of operating-system chips. (4 pts NOTE: Enter formulas in the respective boxes below. Round both to two decimal places. Profit-Maximizing Quantity: Profit-Maximizing Price: b. Enter a formula to calculate the profit (in millions) of the operating-system division. (2 pts.) c. Calculate the profit-maximizing price and quantity (in millions) of the company's smarthpones. NOTE: Calculate both to two decimal places. Profit-Maximizing Price: Profit-Maximizing Quantity: d. What is the company's overall profit (both divisions combined)--in millions? (2 pts.) e. Is the company buying or selling operating-system chips on the open market? Briefly explain. ( ng system for mobile devices, such as smartphones. The other division manufacturers and m s own operating system (NOTE: Each smartphone contains one operating-system chip). Mar smartphone division--excluding the cost of the chip--is a constant $35 (thus, in this problem, rtphone is a constant -1.2 at every price level, with demand for the smartphone given by the fu martphones demanded, in millions. ong run (AC = AVC: all costs are variable). ios: ng-system chips are strictly inputs to the company's smartphone division). h is given by the inverse demand function: P = 145 - 1.5Q, where P is the price per chip, and erating-system division's profit-maximizing quantity and price (when there is an external mar phone. ones (in millions). (2 pts.) ing-system chips. (4 pts.) decimal places. em division. (2 pts.) mpany's smarthpones. (4 pts.) ons? (2 pts.) arket? Briefly explain. (2 pts.) manufacturers and markets its own g-system chip). Marginal cost of a chip in hus, in this problem, AVC = MC). In phone given by the function: Q = 56,375P -1.2., n). e price per chip, and Q is the quantity of re is an external market), but always use 1. At Lou's Big City Parking Garage, Lou incurs marginal cost of $1 (MC=$1.00) per Lou engages in cost-plus pricing (i.e. prices for the long run), AVC is also equal to a - 0.7Q, where Q is the number of hours of parking per customer, per day, and P is th Assume, initially, Lou charges a single hourly price. Use this information to answer the questions below. NOTE: For some of these questions, you may want to do the work outside of Excel a. With a single price, how much will Lou charge per hour to maximize profit, and how many hours NOTE: Cost-plus pricing here is consistent with marginal-cost pricing, so follow the MR=MC appro Hours parked per day, per customer Profit-maximizing Price per Hour b. With a single hourly price, what is Lou's markup and profit margin per customer? (2 pts.) c. With a single hourly price, what is Lou's profit per customer, per day? (2 pts.) Note: Enter a formula--using information above--to calculate profit. Suppose Lou is considering an alternative pricing scheme, in which he would charge $6 for the firs $3 for the next four hours of parking, and $1 per hour for the next three hours of parking (Note: Af In other words, Lou would engage in block pricing, a form of second-degree price discrimination. d. Under this pricing scheme, and assuming each customer parks for the same number of hours a of $1 (MC=$1.00) per customer per hour. Because MC is constant, average variable cost (AVC VC is also equal to average total cost (AC). Assume each of Lou's customers has identical de , per day, and P is the price of parking per hour. ork outside of Excel and just put your answer in the text box provided. fit, and how many hours will each customer per day? (4 pts.) follow the MR=MC approach. ustomer? (2 pts.) uld charge $6 for the first three (3) hours of parking, urs of parking (Note: After 10 hours, Lou would charge a fixed, daily rate). e price discrimination. ame number of hours as found above (in a.), what would be Lou's profit per customer, per day? (4 pts.) e variable cost (AVC) is equal to $1, as well, and because mers has identical demand, given by the expression, P = 8.0 r, per day? (4 pts.) 2. You are a manager in a large hotel chain that is about to open a hotel in a new cit customers that will stay at this hotel: tourists and business travelers. You can sepa third-degree price discrimination. To help you determine the profit-maximizing price 50 other cities (these data can be found below). Based on prior research, you know exponential demand function, of the form: Q = APn, where Q is output (number of ni Part I: For each group of customers, run a regression to estimate "n," the price elas NOTE: Since this is an exponential function, you will have to first transform the dat LN(Q) = LN(A) + nLN(P). In this form, the estimated coefficient for the log of P (i.e. "n") will be, in fact, your es you should obtain a negative value from your regression and not omit the minus sig Part II: Use the results of your regressions to answer the question (determining the HINT: Look at Slide 10 of the lecture notes. NOTE: Assume marginal cost for each nightly stay is $50. a. Based on your regression results, enter a formula in the respective boxes below to calculate the NOTE: Round your answers to the nearest dollar. Tourists: Business Travelers: DATA: Tourists Price (per night) 220 202 213 228 225 211 220 198 209 195 203 216 220 212 183 212 220 194 192 230 222 227 207 227 197 183 180 193 223 215 215 211 182 227 196 223 206 205 209 190 224 221 225 208 Nightly Stays per Month (000s) 80 87 78 70 79 81 76 89 82 86 83 84 73 80 102 83 74 97 88 77 82 79 79 76 87 95 104 90 75 75 75 82 98 72 92 75 81 83 82 92 77 76 73 82 197 180 217 205 201 196 94 105 80 82 82 93 n a hotel in a new city. You have been asked to determine the nightly rates that should be cha velers. You can separate (and so identify) members of each group based on advanced bookin ofit-maximizing price for each group, you use a sample of data you have on these same grou research, you know that demand for both groups exhibit constant elasticity. Therefore, in us output (number of nightly stays per month), P is price per night, A is a constant, and "n" is th ate "n," the price elasticity of demand for that group. (4 pts.) rst transform the data into natural logs in order to estimate a linear regression of the form: A) + nLN(P). will be, in fact, your estimate of the price elasticity of demand for that group. ALSO, because " ot omit the minus sign as you do your calculations. ion (determining the profit-maximizing price for each group). es below to calculate the profit-maximizing price for each group of customers. (6 pts.) Business Travelers Price (per night) 330 376 349 286 355 303 363 279 276 253 353 369 255 298 363 317 312 345 356 366 372 284 262 341 283 380 315 296 360 275 346 303 370 277 297 265 363 305 276 278 308 349 292 276 Nightly Stays per Month (000s) 13 11 11 14 9 13 12 16 15 14 11 11 17 15 10 14 11 13 11 9 10 15 17 12 16 11 14 12 10 13 12 13 11 16 13 16 9 13 15 13 12 11 13 13 285 293 261 331 346 296 13 12 15 10 11 13 es that should be charged to the two distinct groups of on advanced booking. Therefore, you plan to implement on these same groups of customers for the hotel chain in city. Therefore, in using the data below, you will assume an onstant, and "n" is the (constant) price elasticity of demand. ssion of the form: up. ALSO, because "n" is the price elasticity of demand, 3. You have just become the manager of a private golf club, and have been asked to previously managed public golf courses and know from experience there are two ty collected (for four years) data on the number of rounds each golfer played that year at the bottom of this problem, in which you have already divided the data into two e consisting of 100 "occasional" golfers (those without a subscription). Along with th round was played. Part I: For each group of 100 golfers, run a regression to estimate a simple demand explanatory variable) is the price per round, and "a" and "b" are the parameters to b Part II: Use the results of your regressions to answer the questions below. NOTE: Assume, for all questions, that the club incurs a constant marginal cost (and a. Based on your regression results, write the general expression for the respective demand equa NOTE: Round the intercept term to the nearest whole number and the coefficient for P to two deci Serious Golfer Demand: Occasional Golfer Demand: Serious Golfers Only: Suppose you want to consider what the club's profit would be b. How much would the club charge for each round of golf? (2 pts.) c. Enter a formula to calculate the annual membership (entry) fee charged to each golfer. (2 pts.) d. You estimate there are 200 "serious" golfers at your new club. Enter a formula to calculate the NOTE: For purposes of this question, assume there are no fixed costs. Attracting Both Types of Golfers: Now consider what the club's profit would be if yo e. How much would the club charge for each round of golf? (2 pts.) NOTE: Round answer to the nearest dollar. f. Enter a formula to calculate the annual membership (entry) fee charged to each golfer. (2 pts.) g. You project the club could attract 800 "occasional" golfers, in addition to the 200 "serious" golf Enter a formula to calculate the club's profit in this case. (2 pts.) NOTE: Again, assume there are no fixed costs. DATA: Serious Golfers Annual Rounds (18 holes each) Price 69 68 64 69 65 68 66 70 68 66 69 68 67 67 64 65 68 65 64 65 67 68 66 68 65 64 67 65 67 66 64 66 64 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 64 62 65 65 67 67 64 63 63 62 65 62 62 68 64 65 63 62 64 59 60 64 65 64 62 60 62 63 63 63 59 61 63 65 64 64 62 63 62 61 63 59 57 60 61 57 61 63 60 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 61 61 61 63 62 61 63 63 63 58 57 63 58 63 62 57 57 58 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 d have been asked to come up with an annual membership (entry) fee as well as a price to ch ence there are two types of golfers: "serious" and "occasional." In fact, you have annual sur olfer played that year as well as whether the golfer had a subscription to the publication, "Gol d the data into two equal groups, one consisting of 100 "serious" golfers (those with a subsc ption). Along with the annual number of rounds for each golfer, you also have the price of a r ate a simple demand equation (i.e. Q = a - bP), where Q (the dependent variable) represents th e the parameters to be estimated by the regression. ions below. nt marginal cost (and therefore, average variable cost) of $10 for each round of golf. espective demand equation (4 pts.) fficient for P to two decimal places (e.g. Q = 56 - 1.34P). club's profit would be if you limited membership to "serious" golfers. to each golfer. (2 pts.) ormula to calculate the club's profit from limiting membership to just this group of golfers. (2 pts.) profit would be if you priced such that you could attract both "serious" and "occasional" go to each golfer. (2 pts.) o the 200 "serious" golfers who are already members. Occasional Golfers Annual Rounds (18 holes each) Price 19 20 20 19 19 20 19 20 20 20 19 20 20 19 19 20 20 19 18 18 19 19 19 18 18 18 18 19 18 19 18 19 19 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 22.00 18 18 18 19 19 19 17 17 18 17 18 18 17 18 17 18 18 17 17 17 18 17 18 18 17 17 17 17 17 18 17 17 17 18 17 17 17 17 17 16 17 16 17 17 16 17 16 16 16 22.00 22.00 22.00 22.00 22.00 22.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 24.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 16 17 17 17 16 16 16 17 17 16 16 17 16 17 16 17 16 16 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 26.00 e as well as a price to charge for each round (18 holes) of golf. You have act, you have annual survey data from your previous job in which you n to the publication, "Golfer's Digest." A sample of the data can be found fers (those with a subscription to "Golfer's Digest"), and the other group also have the price of a round of golf corresponding to the year when the nt variable) represents the number of annual rounds of golf, P (the only h round of golf. of golfers. (2 pts.) us" and "occasional" golfers. 4. A company has two divisions. The first produces an operating system for mobile smartphone. Of course, the company's smartphone runs on its own operating syst the operating-system division is $90, while marginal cost in the smartphone division addition, the price elasticity of demand for this company's smartphone is a constan where P is the price per smartphone, and Q is the quantity of smartphones demande For this entire problem, assume pricing is conducted over the long run (AC = AVC: In answering the questions below, you will consider two scenarios: Part I: No external market for the operating system (the operating-system chips are Part II: The operating system has its own external market, which is given by the inv chips (in millions). NOTE: Use marginal-cost pricing (MR=MC) to determine the operating-system divis cost-plus pricing to determine the price of the company's smartphone. Part I (No External Market for the Operating System): a. What is the profit-maximizing price of a smartphone? (2 pts.) b. Enter the formula to calculate the profit-maximizing quantity of smartphones (in millions). (2 pts c. What is the company's profit (both divisions combined), in millions? (2 pts.) Part II (External Market for the Operating System): a. Calculate the profit-maximizing quantity (in millions) and price of operating-system chips. (4 pts NOTE: Enter formulas in the respective boxes below. Round both to two decimal places. Profit-Maximizing Quantity: Profit-Maximizing Price: b. Enter a formula to calculate the profit (in millions) of the operating-system division. (2 pts.) c. Calculate the profit-maximizing price and quantity (in millions) of the company's smarthpones. NOTE: Calculate both to two decimal places. Profit-Maximizing Price: Profit-Maximizing Quantity: d. What is the company's overall profit (both divisions combined)--in millions? (2 pts.) e. Is the company buying or selling operating-system chips on the open market? Briefly explain. ( ng system for mobile devices, such as smartphones. The other division manufacturers and m s own operating system (NOTE: Each smartphone contains one operating-system chip). Mar smartphone division--excluding the cost of the chip--is a constant $35 (thus, in this problem, rtphone is a constant -1.2 at every price level, with demand for the smartphone given by the fu martphones demanded, in millions. ong run (AC = AVC: all costs are variable). ios: ng-system chips are strictly inputs to the company's smartphone division). h is given by the inverse demand function: P = 145 - 1.5Q, where P is the price per chip, and erating-system division's profit-maximizing quantity and price (when there is an external mar phone. ones (in millions). (2 pts.) ing-system chips. (4 pts.) decimal places. em division. (2 pts.) mpany's smarthpones. (4 pts.) ons? (2 pts.) arket? Briefly explain. (2 pts.) manufacturers and markets its own g-system chip). Marginal cost of a chip in hus, in this problem, AVC = MC). In phone given by the function: Q = 56,375P -1.2., n). e price per chip, and Q is the quantity of re is an external market), but always use