Problem 4: Air Lift and Big Crane are the only two companies leasing large cranes for high-rise construction work in the

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Problem 4 Air Lift And Big Crane Are The Only Two Companies Leasing Large Cranes For High Rise Construction Work In The 1 (208.24 KiB) Viewed 27 times

Problem 4: Air Lift and Big Crane are the only two companies leasing large cranes for high-rise construction work in the western region of Colorado. No other firms have the equipment necessary to lift material and equipment higher than 5 stories. The monthly market inverse demand for these leases is given below. P=3, 720-30 Q where Pis lease price per month for a crane and Q is total number of leases per month. For simplicity, also assume that neither firm has fixed costs. From company records, you are given the following variable cost function for each firm (here A = Air Lift and B = Big Crane: TVCA = 30 TVC = 50% = a. Suppose Warren Ruffet is contemplating buying both companies and since Air Lift has lower operating costs, his first thought is to shut down Big Crane and supply the entire market as a single plant monopoly. If he does this, what price will he charge per lease and how many leases will he sell each month? What monthly profits will he expect to earn? b. Ruffet has second thoughts about shutting down Big Crane. If he decides to go ahead with the purchase and keep Big Crane in operation, he will operate the firm as a multiplant monopoly. If he decides to go ahead and buy the two firms, what price will he charge per lease and how many leases will he sell each month? What monthly profits will he expect to earn? How many leases will be sold by each operation? c. After careful consideration, Ruffet decides that he isn't interested in buying either of the two companies. In this case the market reverts back to a two-firm Cournot duopoly. Calculate the Cournot market equilibrium price-output solutions for each firm including their respective profits. d. Summarize the results of your findings over the three possible outcomes. In your summary include price, quantity and industry profits for each case. Comment on your results. please do it in 50 minutes please urgently... I'll give you up thumb definitely