Calculate profit maximizing price for coke and for pepsi

Assignment Help Business Economics
Reference no: EM132456383

Problem: P* = MC/1+E

P + P/E = MC

P - MC = -P/E

(P - MC)/P = -1/E

Coke and Pepsi - Bertrand with differentiation model

Profit = (Price - Cost)Q  For cost use Marginal Cost, for Price use Pc or Pp as applicable, and for Q:

Qc = 63.42 - 3.98Pc + 2.25Pp

Qp = 49.52 - 5.48Pp + 1.4Pc

MCc = 4.96, MCp = 3.96

1. Calculate Profit Maximizing price for Coke and for Pepsi Using those prices, MC, and the optimal pricing formula above, calculate the price elasticity of demand for each at profit max.

2. Is one of these the market leader?  Why/how do you know?

3. At these prices would these companies be earning economic profits?  Why/why not (use the data to answer this question).

Reference no: EM132456383

Questions Cloud

How banks get bonds issued by us government : How banks get bonds issued by us government? And sells them to Fed, and then fed give them cash.
Impact on communication of vision to external stakeholders : Evaluates the sources of information needed to review progress with achieving personal development plans - analyses the factors which impact on the creation.
Change the annual interest rate so as to stabilize the spot : By how much should the Governor of the Central Bank of the Grand Fenwick change the annual interest rate so as to stabilize the spot rate?
Discuss how ups aligned their ict strategy : Discuss how UPS aligned their ICT strategy to the organisation's strategy
Calculate profit maximizing price for coke and for pepsi : Calculate Profit Maximizing price for Coke and for Pepsi Using those prices, MC, and the optimal pricing formula above, calculate the price elasticity of demand
Discuss osha for hierarchy of controls for reducing risks : Summarize the positive and negative attributes of the control method you chose, and suggest the difficulties one might expect to encounter
Discuss whether one-factor models are good models : Discuss whether one-factor models are good models for the short-rate of interest (instantaneous risk free rate).
How does this fda regulation protect consumers : 1. How does this FDA regulation protect consumers? 2. Why did the company voluntarily change its product name?
What is the production possibilities curve : What is the production possibilities curve and what does it demonstrate?

Reviews

Write a Review

Business Economics Questions & Answers

  Strong supporter of free trade

if you were a strong supporter of free trade and in charge of U.S. international trade policy, would you cut tariffs and quotas, or would you negotiate with the nation's trading partners, maintaining trade barriers unless they lowered their also? dis..

  What is the probability that a randomly selected adult

What is the probability that a randomly selected adult has a "normal" resting body temperature that is greater than 99 degrees Fahrenheit?

  Determine the maximum amount the contractor

A contractor must choose between buying or renting a crane for the duration of a 5 year construction project. The contractor uses an MARR of 8%. At the end of the project, the crane can be sold for 21% of its initial cost. The cost to operate and mai..

  Heckscher-ohlin theory

According to the Heckscher-Ohlin theory, two countries that have the same production technologies for the various products that they produce are unlikely

  Illustrate what wage would a monopoly union demand

illustrate what wage would a monopoly union demand. Explain how many workers would be employed under union contract.

  Warning about use of magic-spells

Warning about use of magic/spells (by whom?) Death of Pelias (how?) Death of Glauce (how?) Death of children (how/ by whom?)

  Government has decided to impose a new excise tax on sale

The government has decided to impose a new excise tax on the sale of cigarettes. suppose that we know the demand for cigarettes is relatively inelastic, but the supply is relatively eleastic. Which group, consumers or producers, will e affected more ..

  What are the credit risks faced by retail banking

What are the credit risks faced by retail banking

  Explain your answer statements be true at the same time

Explain your answer statements be true at the same time. The unemployment rate in Tappania is higher now than it has been in 50 years.

  Binomial or poisson distribution be suitable

Would Binomial or Poisson distribution be suitable for modeling this case?

  Lend money with family and friends

Do you ever borrow or lend money with family and friends? Given the time value of money, is it ethical not to pay interest? How does the amount or duration.

  Describe a few of the fiscal policy measures

Describe a few of the fiscal policy measures employed by President Trump over the past two years.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd