User Account

All Pages

Find the indirect utility function for united airlines

Assignment Help Business Management
Reference no: EM131613665

Suppose United Airlines is deciding on purchasing engines from General Electric (GE) and Rolls- Royce (RR) for its new Boeing 787 fleet with budget I=$2 billion. The airline company has utility function U (g, r) = g3r, where g are the engines produced by GE and r are the engines from RR. pg and pr are prices for each GE and RR engine respectively. The Marshallian demand functions

are g∗ = 3I and r∗ = I . 4pg 4pr

  1. Find the indirect utility function for United Airlines.
  2. Suppose pg = $25 million and pr = $20 million. What is United's maximized utility? How many GE engines do they purchase?
  3. Now suppose the U.S. Department of Commerce is trying to promote American engine man- ufacturers. Thus United Airlines will be given a 10% subsidy on price when purchasing from GE, and levied a 15% tax on price when purchasing from RR.
  4. How does this policy affect United's budget constraint? Write down the new budget and draw the old/new budget in the same graph.
  5. How many GE engines are purchased?
  6. What is the utility level of United Airlines with this policy?
  7. What is the total tax that United has to pay for purchasing the RR engines?

Reference no: EM131613665

Questions Cloud

Describe in words the level surfaces of the given function : Describe the surface x2 + y2 = (2 + sin z)2. In general, if f(z) = 0 for all z, describe the surface x2 + y2 = (f(z))2.
Create all the tables and relationships in microsoft access : Create an integrated REA diagram that includes both the revenue cycle and the expenditure cycle. Create all the tables and relationships in Microsoft Access
What are the benefits of using nap : Describe a scenario where an organization will need to use NAP? What are the benefits of using NAP?
Explain behaviors as a student : explain behaviors as a student, your interactions with your classmates, and impact your relationships with family and friends
Find the indirect utility function for united airlines : What is the utility level of United Airlines with this policy? What is the total tax that United has to pay for purchasing the RR engines?
What is the clinic forecasted external financing requirement : What is the clinic’s forecasted external financing requirement (in millions)?
Prepare the journal entries to record transactions : The petty cash fund balance was increased by $114 to $363 on April 20. Prepare the journal entries to record transactions
Prepare a bank reconciliation going from balance per bank : Prepare a bank reconciliation going from balance per bank and balance per book to correct cash balance
Compute the current fair price of the stock : Compute the current fair price of the stock (Po).

Reviews

Write a Review

Business Management Questions & Answers

  What laws govern arbitration in the u.s.? in russia?

What laws govern arbitration in the U.S.? In Russia?

  How us based corporations could incorporate elements

how U.S.-based corporations could incorporate elements of the corporate governance practices you researched to help top-level managers make better ethical decis

  What is the social cost of a monopoly

An upscale bistro in a small town charges higher prices for the same menu items at dinner time than at lunch time. Does the bistro necessarily practice price discrimination? Explain your answer.

  Assess the resumes of each interview candidate

Assess the resumes of each interview candidate. Utilize appropriate selection techniques to evaluate and hire the best candidate for the job.

  Differences in the quality of products

Compare an $80,000 median family income in 1980 to the same income in 1990, 2000, and 2010. What are the differences in the available products? What are the differences in the quality of those products? Considering this, in which of those years wo..

  Refuse cherie liottas credit application

Refuse Cherie Liotta's credit application, but encourage her cash business. Suggest that she make an inquiry to the credit reporting company Experian to learn about her credit report.

  Some problems of mutual adjustment

In his classic article "The Individual and Organization - Some Problems of Mutual Adjustment," Chris Argyris argues that organizations work against the motivations of healthy, fully-functioning adults.

  Purpose of job evaluation

The purpose of job evaluation is to create internal equity among job. Internal equity means that the individual employee perceives that their position is treated fairly within a pay programme in relation to other jobs within the organisation.

  Discuss implications of bp''s strategy in terms

• Conduct research and provide an analysis of BP's strategy before the accident occurred using appropriate strategic frameworks (which you have learned throughout this module)Discuss implications of BP's strategy in terms of public perception and..

  Proto-pop and the beats

Changing Times: Proto-Pop and The Beats (must include either Robert Rauschenberg or Jasper Johns)

  Taking a hard look at formal mentoring programs

Write two paragraphs- summarizing the article and write one page with the information - Taking a hard look at formal mentoring programs

  Determine if this claim has a statistical basis

In writing an article about call center working conditions, a reporter has claimed that average tenure is no more than two years. Formulate also test a hypothesis to determine if this claim has a statistical basis from this sample.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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