Managerial Economics 2nd Edition by William Boyes

تمرين 9

The following data represent a firm serving a specific transportation market.

a. What price maximizes revenue?
b. What price maximizes profit?
c. What is fixed cost?
d. This firm faces a rival that cuts its revenue significantly. The firm has decided to undertake predatory pricing to drive the other firm out of business. The other firm has a cost structure that looks like the following:

What price would drive the firm out of business? How much would it cost the incumbent firm to drive the rival out of the market? Could the firm raise the price to recoup the losses?