Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Microeconomics Expert

The two largest diner chains in Kansas compete for weekday breakfast customers. The two chains, Golden Inn and Village Diner, each off weekday breakfast customers a "breakfast club" membership that entitles customers to breakfast buffet between 6AM and 8:30AM Club members are sold as passes good for 20 weekday breakfast visits.

Golden Inn offers a modest but tastey buffet, while village diner provides a wider variety of breakfast items that are also said to be quite tasty. The demand functions for the breakfast club memberships are:

QG = 5,000 - 25PG + 10PV
QV= 4,200 - 24PV + 15PG

Where QG and QV are the number of club memberships sold monthly and PG and PV are the prices of club memberships, both respectively, at Golden Inn and Village Diner chains. Both diners experience long-run constant costs of production, which are

LACG = LMCG = $50 per membership
LACV = LMCV = $75 per membership

The best response curves for Golden Inn and Village Diner are, respectively,

PG = BRG(PV) = 125 + 0.2PV
PV = BRV(PG) = 125 + 0.3125PG

a) If Village Diner charges $200 for its breakfast club membership, find the demand inverse demand, and marginal revenue functions for Golden Inn. What is the profit-maximizing price for Golden Inn given Village Diner charges a price of $200? Verify mathematically that this price can be obtained from the appropriate best-response curve given above.

b) Find the Nash equilibrium prices for the two diners. How many breakfast club memberships will each diner sell in Nash equilibrium? How much profit will each diner make?

c) How much profit would Golden Inn and Village Diner earn if they charged prices of $165 and $180 respectively? Compare these profits to the profits in Nash equilibrium (part c). Why would you not expect the managers of Golden Inn and Village diner to choose prices of $165 and $180, respectively?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M945315

Have any Question? 


Related Questions in Microeconomics

Assignment economics read the following case study and

ASSIGNMENT: ECONOMICS Read the following case study and answer the given question. THE MACROECONOMICS OF POVERTY REDUCTION: THE CASE STUDY OF BANGLADESH Adapted: Osmani, S.R; Mahmud, W; Sen, B; Dagdeviren, H; and Seth, A ...

Article analysisplease choose an article from the wall

Article Analysis Please choose an article from the Wall Street Joumal, The Economist, Bureau of Labor/Statistics, Bureau of Economic Analysis etc... or any peer reviewed article for the UOP library. Select one subjects f ...

Assignment voluntourism-go to httpwwwvoluntourismorgreview

Assignment: VolunTourism- Go to http://www.voluntourism.org Review the home page to understand the resources available on this web site and to get a feeling for what VolunTourism is.On the menu (left screen) under "Who A ...

Assignmentchoose one of the readings from chapters 14 15 or

Assignment Choose one of the readings from chapters 14, 15, or 16 and summarize, explain, and evaluate the main points of the reading in a minimum of 3 paragraphs. Do not simply cut and paste from the reading, but summar ...

Implicit and explicit costs economic problemsproblem achoco

Implicit and Explicit Costs: Economic Problems Problem A Choco Delite is a manufacturer of fine chocolates. Its monthly rental expense is $1,000,000. It also has $2 million in fixed labor costs. Its marginal costs are $. ...

Meqa assignment 2its been three weeks since you started

MEQA Assignment 2 It's been three weeks since you started working for BioMed and there's still no trace of Selwyn. That means you're still BioMed's resident economic expert. Harry the CEO was pleased with your earlier wo ...

Assignmentoverviewthe incidence of fraud in the news has

Assignment Overview The incidence of fraud in the news has become more common in recent years. As the accounting profession becomes more aware of fraud schemes, it seems that the criminals who perpetrate them have become ...

Assignmentlearning objectives covered1explain 3 ways the

Assignment Learning Objectives Covered: 1. Explain 3 ways the statement of goals, application of rewards, and institution of discipline affect and motivate ethical behavior in individuals 2. Demonstrate how roles and aut ...

Assignmentwe often have difficulty understanding how our

Assignment We often have difficulty understanding how our own customs and traditions could be viewed any way other than as right. In that regard, cultural relativism (viewing a custom from the other culture's perspective ...

Q1 in quantity theory of money model mv py assume that v

Q1. In quantity theory of money model, MV = PY, assume that V is constant, M is growing at 6% per year, Y is growing at 3%. a. If r = 2, what is i? b. If the Fed reduces the money growth rate by 2% points per year, what ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro