# Market Structures and Pricing Decisions

Applied Problems.

Please, complete the following 2 applied problems in a Word document. Show all your calculations and explain your results.

1. A small business which produces plastic vacuum-suction covers for has a monopoly that is protected by a utility patent. The market demand curve for this product is estimated to be:Q = 6009 25P where Q is the number of plate covers per year and P is in dollars.Cost estimation processes have determined that the firms cost function is represented by TC = 120 + 2500Q -0.25*Q2.(i)What is the profit-maximizing price and output level? Solve this algebraically for equilibrium P and Q and also plot the MC, D and MR curves and illustrate the equilibrium point.

(ii)What profit do you expect that the firm will make in the first year?

(iii)Do you expect this profit level to continue in subsequent years? Why or why not?

2. Greener Grass Company (GGC) competes with its main rival, Better Lawns and Gardens (BLG), in the supply and installation of in-ground lawn watering systems in the wealthy western suburbs of a . Last year, GGCs price for the typical lawn system was \$1,995 compared with BLGs price of \$2,100. GGC installed 9,130 systems, or about 55% of total sales and BLG installed the rest. (No doubt many additional systems were installed by do-it-yourself homeowners since the parts are readily available at hardware stores.) GGC has substantial excess capacityit could easily install 25,000 systems annually, as it has all the necessary equipment and can easily hire and train installers. Accordingly, GGC is considering expansion into the eastern suburbs, where the homeowners are less wealthy. In past years, both GGC and BLG have installed several hundred systems in the eastern suburbs but generally their sales efforts are met with the response that the systems are too expensive. GGC has hired you to recommend a pricing strategy for both the western and eastern suburb markets for this coming season. You have estimated two distinct demand functions, as follows:Qw =1,035.548– 6.07164Pgw+2.83Pbw+ 2,100Ag– 1,500Ab+ 0.2348Yw

for the western market and

Qe =49,714.29– 30.7692Pge+6.984Pbe+1,180Ag–950Ab+0.0825Ye

for the eastern market, where Q refers to the number of units sold; P refers to price level; A refers to advertising budgets of the firms (in millions); Y refers to average disposable income levels of the potential customers; the subscripts w and e refer to the western and eastern markets, respectively; and the subscripts g and b refer to GGC and BLG, respectively. GGC expects to spend \$1.5 million on advertising this coming year and expects BLG to spend \$1.2 million on advertising. The average household disposable income is \$55,000 in the western suburbs and \$25,000 in the eastern suburbs. GGC does not expect BLG to change its price from last year, since it has already distributed its glossy brochures (with the \$2,100 price stated) in both suburbs, and its TV commercial has already been produced. GGCs cost structure has been estimated as TVC= 755.363Q+ 0.005Q2where Q represents single lawn watering systems.

a.Derive the demand curves for GGCs product in each market.

b.Plot graphically the demand and MR curves for each market, and also show GGCs combined marginal revenue curve (MR) and its MC curve. Show graphically the quantities that should be produced and sold, and the prices that should be charged, in each market.

c.Confirm your quantity and price results algebraically.

d.Calculate the price elasticities of demand in each market and discuss these in relation to the prices to be charged in each market.

e.Add a short note to GGC management outlining any reservations and qualifications you may have concerning your price recommendations.

## Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26
The price is based on these factors:
Number of pages
Urgency
Basic features
• Free title page and bibliography
• Unlimited revisions
• Plagiarism-free guarantee
• Money-back guarantee
On-demand options
• Writer’s samples
• Part-by-part delivery
• Overnight delivery
• Copies of used sources
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

# Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

### Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

### Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

### Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

### Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Need assignment help? You can contact our live agent via WhatsApp using +1 718 717 2861

Feel free to ask questions, clarifications, or discounts available when placing an order.
+1 718 717 2861           + 44 161 818 7126           [email protected]
+1 718 717 2861         [email protected]