lowest bid price they should accept
Not what you're looking for?
Air Express, an overnight mail carrier, provides one flight per day from Portland, Maine to Hawaii. Currently Air Express flights have been operating at 80% capacity (maximum capacity 400 pounds). Therefore each flight has the potential to carry 80 additional pounds of mail. Air Express is currently accepting bids to carry 80 pounds of mail to be delivered to Hawaii. You have been retained by Express to provide them with the lowest bid price they should accept for the 80 pounds of unused capacity without reducing their current level of profits?
Your analysis, to date, has shown the following:
P = 82 - .25q (demand equation) where P is the price Express charges to delivery a pound of mail and q represents a pound of mail.
TC = .00025q2 +q + 700
MC = .0005q + 1
MR = 680 - .5q
Purchase this Solution
Solution Summary
Determine lowest bid price they should accept in the scenario.
Solution Preview
The revenue of the mail delivery is
TR = P*q = (82 - .25q)* q = 82 q - .25q2
Thus, the marginal revenue is dTC / dq = 82 - ...
Purchase this Solution
Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.