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Econ 4140/5140 Managerial Economics
Homework 7
Dr. Michael Nieswiadomy
Due date: May 3, 2010
Show your work.
1) (20 points) In the transfer pricing graph below, how much output should the engine
division (E) produce if the competitive market price for engines is $10? How much output
should the engine division sell to the assembly division and how much output should the
engine division sell to the outside market? Should the assembly division buy any engines
from the outside market? If so, how many? Show your work on the graph.
2) (20 points) In the dominant firm price leader figure below, what price will be set by the
dominant firm? What outputs will be produced by the dominant firm (QD) and the
competitive firms (QS) respectively? You do not need to write any equations. Only show
graphically.
3) (20 points) Airline Overbooking Problem. The ticket price for a flight from Dallas to
Chicago is $400. A plane can hold 300 passengers. Federal law requires that any customer
who is unable to board a plane because it is over sold is entitled to compensation of $250.
The number of no shows has a mean 30 with a standard deviation of 7. To maximize
expected revenues minus compensation costs, how many tickets should the airline sell for
each flight? Assume that anyone who does not use a ticket receives a $400 refund. Look
at the Probabilistic Inventory handout for details. We will cover this in class next week.
4) (20 points) Bartels and Jaymes are two individuals who one day discover a stream that
flows wine cooler instead of water. Bartels and Jaymes decide to bottle the wine cooler
and sell it. The marginal cost of bottling wine cooler and the fixed cost to bottle wine
cooler are both zero. The market demand for bottled wine cooler is given as: P = 90 0.25Q where Q is the total quantity of bottled wine cooler produced and P is the market
price of bottled wine cooler.
a. Suppose that Bartels and Jaymes act as Cournot duopolists, what are the
reaction functions for Bartels and for Jaymes?
b. In the long run, what level of output will Bartels produce if Bartels and Jaymes
act as Cournot duopolists?
5) (20 points) Use the data on the following 925 customers to build a Pivot Table. It should
show the average amount spent on travel for the age groups (your 1st column) of 25-34, 3544, 45-54, 55-64 for Women (2nd column) and Men (3rd column). You should NOT print
this data out. It is long. Just copy and paste it in Excel.
1
Observation
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
Amount Spent on
Travel
997
850
997
951
993
781
912
649
1265
680
800
613
993
1059
939
841
828
1004
983
837
924
852
963
1046
943
875
979
1022
527
649
1130
1133
692
1341
1132
803
786
451
1237
825
895
937
1096
741
816
663
Age
44
39
43
41
50
39
45
59
25
38
41
32
46
38
42
44
38
50
48
46
42
48
39
36
44
46
44
40
26
34
59
30
55
26
55
41
50
64
26
40
47
45
40
36
47
59
Gender
M
F
M
M
F
F
F
M
M
F
F
F
F
M
F
F
F
F
F
M
M
M
M
M
F
F
M
M
F
F
F
M
M
M
F
F
M
M
M
F
M
F
M
F
M
M
2
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
1141
646
1346
698
870
1002
850
1245
728
698
503
1084
1115
1073
623
1074
981
583
621
1346
1042
1262
579
883
541
937
968
887
1159
605
646
984
1050
1123
1213
965
1036
879
667
1282
1212
723
632
842
1188
811
731
1258
1128
887
34
58
26
57
47
49
48
34
36
32
60
52
53
50
58
37
44
26
59
25
51
28
59
50
27
45
50
46
33
28
56
39
50
55
28
45
52
46
55
62
60
56
59
41
33
46
37
26
56
43
M
M
M
M
M
F
M
M
F
F
M
F
F
F
M
M
M
F
M
M
F
M
M
F
F
F
F
M
M
F
M
M
F
F
M
F
F
M
M
F
F
M
M
F
M
M
F
M
F
F
3
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
1074
925
1263
1206
596
1173
621
576
1384
544
1083
678
963
1233
688
822
804
952
967
538
1224
813
565
926
521
519
773
862
1130
715
922
811
461
576
620
1226
742
1167
1186
509
999
782
499
962
948
990
509
463
995
1068
55
52
27
32
60
33
60
61
64
63
33
33
45
28
55
51
39
45
46
62
59
36
59
45
62
26
53
50
59
36
49
39
63
64
59
25
49
58
60
63
41
49
28
50
42
47
61
26
48
38
F
F
M
M
M
M
M
M
F
M
M
F
M
M
M
M
F
F
F
M
F
F
M
F
M
F
M
M
F
F
M
F
M
M
M
M
M
F
F
M
M
M
F
F
M
F
M
F
F
M
4
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191
192
193
194
195
196
1167
1211
798
1162
745
853
679
518
1123
969
1039
638
1002
1021
510
1287
1212
944
569
614
601
602
1177
1249
766
694
650
1083
857
758
564
820
879
479
1055
976
602
943
1127
493
820
642
454
1116
939
1241
1295
1185
687
503
57
27
51
57
56
43
35
25
55
36
55
33
56
51
63
25
63
41
61
58
63
33
56
57
41
51
59
37
46
52
60
45
46
29
53
46
30
42
58
25
43
60
28
57
43
61
62
29
37
27
F
M
M
F
M
F
F
F
F
M
F
F
F
F
M
M
F
M
M
M
M
F
F
F
F
M
M
M
M
M
M
F
M
F
F
F
F
M
F
F
F
M
F
F
F
F
F
M
F
F
5
197
198
199
200
201
202
203
204
205
206
207
208
209
210
211
212
213
214
215
216
217
218
219
220
221
222
223
224
225
226
227
228
229
230
231
232
233
234
235
236
237
238
239
240
241
242
243
244
245
246
1238
693
731
525
653
805
1060
544
1052
1253
998
1232
1050
911
1079
821
1201
846
1208
939
719
1047
981
1141
547
619
1166
911
1044
840
1294
1092
977
1246
638
659
786
629
586
1311
1324
1230
880
1303
588
1259
1154
1177
1218
898
60
35
51
60
35
47
39
64
37
59
40
27
39
47
52
49
32
47
61
48
54
55
41
34
62
35
32
46
56
50
64
56
53
63
38
54
51
28
59
27
64
26
48
25
31
61
35
56
31
50
F
F
M
M
F
F
M
M
M
F
M
M
M
M
F
M
M
M
F
F
M
F
M
M
M
F
M
M
F
M
F
F
F
F
F
M
M
F
M
M
F
M
M
M
F
F
M
F
M
F
6
247
248
249
250
251
252
253
254
255
256
257
258
259
260
261
262
263
264
265
266
267
268
269
270
271
272
273
274
275
276
277
278
279
280
281
282
283
284
285
286
287
288
289
290
291
292
293
294
295
296
784
685
1075
576
1051
1303
666
1178
1209
684
699
1163
1070
1042
1028
1220
778
924
901
471
953
1181
1147
535
1226
777
575
1129
552
717
1241
1319
562
1239
1286
1094
700
938
648
962
919
816
964
980
530
1063
1342
913
871
754
36
35
49
32
47
25
58
63
31
37
40
33
38
55
38
27
39
42
47
64
44
32
56
64
60
39
26
31
29
59
28
26
62
63
64
35
38
46
54
47
45
49
42
51
64
36
63
46
47
56
F
F
F
F
F
M
M
F
M
F
F
M
M
F
M
M
F
M
M
M
F
M
F
M
F
F
F
M
F
M
M
M
M
F
F
M
F
F
M
F
M
M
M
F
M
M
F
F
F
M
7
297
298
299
300
301
302
303
304
305
306
307
308
309
310
311
312
313
314
315
316
317
318
319
320
321
322
323
324
325
326
327
328
329
330
331
332
333
334
335
336
337
338
339
340
341
342
343
344
345
346
685
1078
766
884
660
829
584
839
1299
777
1315
1126
641
606
797
513
1201
823
596
1267
853
1105
800
779
1008
782
1031
886
939
1024
1036
1148
979
586
1136
562
1285
920
562
603
853
816
1048
1062
1203
1193
1088
593
661
869
53
59
52
40
62
45
62
43
26
57
63
55
33
32
50
64
29
42
62
29
48
53
37
41
52
43
45
47
44
51
40
28
49
60
58
29
28
44
26
60
49
44
35
39
33
62
55
31
55
44
M
F
M
F
M
M
M
F
M
M
F
F
F
F
M
M
M
F
M
M
M
F
F
F
F
F
M
F
M
F
M
M
F
M
F
F
M
M
F
M
M
M
M
M
M
F
F
F
M
F
8
347
348
349
350
351
352
353
354
355
356
357
358
359
360
361
362
363
364
365
366
367
368
369
370
371
372
373
374
375
376
377
378
379
380
381
382
383
384
385
386
387
388
389
390
391
392
393
394
395
396
1123
1086
1205
692
914
856
1108
1286
972
1066
1173
988
1033
608
655
696
604
856
541
600
1348
896
864
660
1154
1058
1067
1001
589
1238
984
753
1152
1065
762
512
683
537
511
860
829
928
786
678
664
1011
868
888
723
852
34
35
27
36
44
42
38
27
39
38
33
40
35
58
59
33
29
51
59
55
27
43
41
59
31
37
52
51
59
61
47
33
57
32
37
58
34
29
64
42
43
47
38
33
33
38
44
44
37
46
M
M
M
F
M
F
M
M
M
M
M
M
M
M
M
F
F
M
M
M
M
M
F
M
M
M
F
F
M
F
F
F
F
M
F
M
F
F
M
F
F
F
F
F
F
M
F
F
F
M
9
397
398
399
400
401
402
403
404
405
406
407
408
409
410
411
412
413
414
415
416
417
418
419
420
421
422
423
424
425
426
427
428
429
430
431
432
433
434
435
436
437
438
439
440
441
442
443
444
445
446
1312
1138
975
1282
682
1145
1148
808
1259
667
492
641
650
1246
779
412
581
644
1010
1074
1020
718
495
848
1042
882
469
782
561
1081
1276
884
1024
937
1049
1150
1360
833
747
1084
576
1071
852
1271
955
1110
907
1249
539
592
63
33
41
63
33
36
57
47
27
34
25
58
32
63
40
25
63
33
35
50
54
57
64
43
41
48
25
35
26
55
26
43
39
46
37
55
25
45
52
36
32
56
42
64
52
57
45
31
28
34
F
M
M
F
F
M
F
M
M
F
F
M
F
F
F
F
M
F
M
F
F
M
M
F
M
M
F
F
F
F
M
M
M
F
M
F
M
F
M
M
F
F
M
F
F
F
F
M
F
F
10
447
448
449
450
451
452
453
454
455
456
457
458
459
460
461
462
463
464
465
466
467
468
469
470
471
472
473
474
475
476
477
478
479
480
481
482
483
484
485
486
487
488
489
490
491
492
493
494
495
496
792
1056
904
547
1191
647
923
1195
941
485
771
1276
1227
652
1040
1125
838
716
650
899
678
1021
958
1260
1158
1244
515
839
467
1168
788
1224
1269
1120
957
385
1120
973
821
675
869
918
1214
616
1299
1290
943
896
984
1004
50
36
44
29
30
57
46
59
46
62
39
27
58
56
42
55
41
51
60
46
60
50
49
63
62
58
25
45
27
58
41
57
64
55
39
25
59
46
49
55
50
45
62
30
25
27
49
48
42
55
M
M
F
F
M
M
F
F
M
M
F
M
F
M
M
F
F
M
M
M
M
F
F
F
F
F
F
F
F
F
F
F
F
F
M
F
F
M
M
M
M
F
F
F
M
M
F
F
M
F
11
497
498
499
500
501
502
503
504
505
506
507
508
509
510
511
512
513
514
515
516
517
518
519
520
521
522
523
524
525
526
527
528
529
530
531
532
533
534
535
536
537
538
539
540
541
542
543
544
545
546
816
1065
956
1312
1231
731
1206
1117
1092
761
1233
721
983
1239
647
1181
1040
969
998
1099
991
482
1049
898
474
749
750
694
839
1111
988
627
1051
653
1164
540
1189
926
836
1363
827
616
1122
722
1026
957
1057
664
1249
587
45
38
47
26
31
54
32
32
56
39
56
34
44
29
28
56
37
49
55
56
54
60
51
45
31
36
50
52
45
34
38
58
50
56
58
29
58
44
44
25
47
33
31
51
52
48
37
58
59
57
F
M
F
M
M
M
M
M
F
F
F
F
M
M
F
F
M
F
F
F
F
M
F
M
F
F
M
M
M
M
M
M
F
M
F
F
F
M
F
M
F
F
M
M
F
F
M
M
F
M
12
547
548
549
550
551
552
553
554
555
556
557
558
559
560
561
562
563
564
565
566
567
568
569
570
571
572
573
574
575
576
577
578
579
580
581
582
583
584
585
586
587
588
589
590
591
592
593
594
595
596
771
811
537
663
915
823
839
948
465
663
972
518
1349
1008
683
629
973
864
920
947
1045
1004
608
472
835
1010
1251
656
863
1270
1147
1163
499
1136
1189
1116
754
467
722
1234
1160
817
1337
1111
1079
610
787
653
530
1299
34
42
64
29
46
51
37
48
25
57
43
25
25
40
34
58
39
47
42
40
53
48
31
25
48
51
64
33
49
31
32
58
63
33
34
34
53
26
52
26
32
39
62
53
55
30
45
33
64
27
F
F
M
F
F
M
F
F
F
M
M
F
M
M
F
M
M
M
M
M
F
F
F
F
M
F
F
F
M
M
M
F
M
M
M
M
M
F
M
M
M
F
F
F
F
F
M
F
M
M
13
597
598
599
600
601
602
603
604
605
606
607
608
609
610
611
612
613
614
615
616
617
618
619
620
621
622
623
624
625
626
627
628
629
630
631
632
633
634
635
636
637
638
639
640
641
642
643
644
645
646
617
613
767
1230
1070
1034
1004
645
1003
1199
1006
533
721
1135
1005
1055
965
646
1277
986
946
1339
995
657
1002
529
826
862
1216
868
514
1279
525
795
826
1265
585
663
1204
849
733
989
1282
1147
1061
1123
976
1007
672
768
28
32
52
62
53
51
41
56
50
32
36
64
37
58
45
38
45
28
28
37
40
25
41
56
39
63
46
47
61
39
30
28
26
37
48
61
32
57
63
48
36
49
27
54
37
31
48
38
54
43
F
F
M
F
F
F
M
M
F
M
M
M
F
F
F
M
F
F
M
M
M
M
M
M
M
M
M
M
F
F
F
M
F
F
M
F
F
M
F
M
F
F
M
F
M
M
F
M
M
F
14
647
648
649
650
651
652
653
654
655
656
657
658
659
660
661
662
663
664
665
666
667
668
669
670
671
672
673
674
675
676
677
678
679
680
681
682
683
684
685
686
687
688
689
690
691
692
693
694
695
696
1102
1335
652
1226
890
804
543
1109
731
826
1250
642
1280
1247
676
1089
1282
1154
1168
792
656
1193
1111
989
691
759
643
873
843
1211
1109
1178
795
1168
980
1175
1011
781
646
505
781
1084
1175
716
649
841
1129
1301
800
786
34
28
34
59
43
43
26
41
53
49
27
59
27
25
32
33
25
37
30
42
36
33
33
48
31
38
57
44
46
31
34
28
43
59
48
58
50
44
34
25
51
40
59
38
56
41
55
62
38
53
M
M
F
F
M
F
F
M
M
M
M
M
M
M
F
M
M
M
M
F
F
M
M
F
F
F
M
F
M
M
M
M
F
F
F
F
F
F
F
F
M
M
F
F
M
F
F
F
F
M
15
697
698
699
700
701
702
703
704
705
706
707
708
709
710
711
712
713
714
715
716
717
718
719
720
721
722
723
724
725
726
727
728
729
730
731
732
733
734
735
736
737
738
739
740
741
742
743
744
745
746
905
1124
1187
805
821
1134
1267
1226
618
1111
1225
935
591
917
727
847
689
1093
845
668
1153
1072
590
648
431
1053
825
1027
708
549
880
1054
518
559
640
1246
1112
730
975
462
835
746
479
743
978
716
894
820
747
983
50
35
30
35
51
36
63
59
32
55
60
50
30
42
53
45
36
54
40
56
33
56
61
59
64
55
42
51
53
29
46
37
63
63
61
29
34
40
44
26
48
39
25
49
43
35
44
48
53
52
M
M
M
F
M
M
F
F
F
F
F
F
F
M
M
F
F
F
F
M
M
F
M
M
M
F
F
F
M
F
M
M
M
M
M
M
M
F
M
F
M
F
F
M
M
F
M
M
M
F
16
747
748
749
750
751
752
753
754
755
756
757
758
759
760
761
762
763
764
765
766
767
768
769
770
771
772
773
774
775
776
777
778
779
780
781
782
783
784
785
786
787
788
789
790
791
792
793
794
795
796
1255
1165
1252
1168
713
1221
1144
718
1027
925
858
734
612
871
874
825
1175
612
905
1310
854
1274
1095
681
907
706
995
775
680
750
1056
830
951
744
823
1121
959
586
672
973
931
1069
927
736
586
808
513
1257
761
1241
28
35
26
59
56
62
36
35
38
46
46
36
60
43
44
50
61
29
44
64
45
27
33
56
47
32
39
48
58
55
53
48
46
50
39
32
49
61
31
53
43
37
43
34
64
49
26
31
37
25
M
M
M
F
M
F
M
F
M
F
M
F
M
M
F
M
F
F
M
F
F
M
M
M
M
F
M
M
M
M
F
M
M
M
F
M
F
M
F
F
M
M
F
F
M
M
F
M
F
M
17
797
798
799
800
801
802
803
804
805
806
807
808
809
810
811
812
813
814
815
816
817
818
819
820
821
822
823
824
825
826
827
828
829
830
831
832
833
834
835
836
837
838
839
840
841
842
843
844
845
846
828
743
1174
478
711
949
803
1253
787
1130
1164
1130
615
732
732
1263
677
1069
761
1122
995
1037
776
1268
591
848
924
847
1131
1279
649
620
717
1171
721
1043
951
971
1125
1132
712
1018
1191
673
1273
1256
728
807
1100
877
38
32
57
63
51
44
45
62
51
59
60
59
34
37
55
62
54
54
43
38
52
41
39
31
58
41
46
46
55
31
59
28
51
58
55
39
46
50
55
55
53
39
31
58
27
64
37
38
34
42
F
F
F
M
M
M
M
F
M
F
F
F
F
F
M
F
M
F
F
M
F
M
F
M
M
F
F
M
F
M
M
F
M
F
M
M
M
F
F
F
M
M
M
M
M
F
F
F
M
M
18
847
848
849
850
851
852
853
854
855
856
857
858
859
860
861
862
863
864
865
866
867
868
869
870
871
872
873
874
875
876
877
878
879
880
881
882
883
884
885
886
887
888
889
890
891
892
893
894
895
896
1130
1302
1155
568
804
958
616
536
1314
592
1086
1091
965
1075
955
934
1333
941
846
1064
777
1214
1082
673
688
1242
739
1038
679
825
1226
528
609
1218
561
681
1218
1101
1129
601
1280
918
1275
944
1119
770
835
1074
1300
590
51
25
30
64
38
46
32
27
63
27
58
54
44
57
47
48
25
51
43
34
39
57
53
36
53
27
39
53
56
38
30
27
57
28
27
36
62
56
56
61
31
42
26
47
34
40
41
40
61
62
F
M
M
M
F
F
F
F
F
F
F
F
M
F
F
F
M
F
M
M
F
F
F
F
M
M
F
F
M
F
M
F
M
M
F
F
F
F
F
M
M
F
M
F
M
F
F
M
F
M
19
897
898
899
900
901
902
903
904
905
906
907
908
909
910
911
912
913
914
915
916
917
918
919
920
921
922
923
924
925
548
726
760
1150
1353
731
906
1117
535
937
859
882
985
547
733
954
1110
1241
570
532
753
680
907
775
1111
697
857
883
1038
25
36
39
55
25
52
44
59
30
45
44
44
52
26
53
51
59
29
60
63
51
56
44
53
57
57
48
43
53
F
F
F
F
M
M
M
F
F
M
M
M
F
F
M
F
F
M
M
M
M
M
F
M
F
M
M
F
F
20
Transfer Pricing
60
50
Price
40
30
20
10
0
0
10
20
30
40
50
60
Quantity
D
MR
MCA
MCE
21
Dominant Firm Price Leader Model
75
70
65
60
55
50
45
e 40
ic
r
P 35
30
25
20
15
10
5
0
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
Quantity
Demand
MCdom
MCfringe
22
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