A major export company exports two major items, manufactured items and semi manufactured raw materials. Use the following demand functions, P1= 100-201 P2=80-02 Q represents the tons of freight moved. The cost function for the firm is, TC-20 + 4(Q1+Q2)
A. Determine the firm’s total profit function.
B. What are the profit maximizing levels of price and output for the two freight categories?
C. From above, what is the marginal revenue in each market?
D. What is the profit if the firm is able to charge different prices to each market?
E. If the firm is required to charge one price to all markets, what is the new profit maximizing level of price and output? What are the profits?
F. Why is there a profit difference? What are the different characteristics between the two demand functions?