The Panama Canal Authority operates the Panama Canal to maximize profits for the Panamanian government. Tolls...
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The Panama Canal Authority operates the Panama Canal to maximize profits for the Panamanian government. Tolls for using the Panama Canal are imposed based the number of twenty foot equivalent units (TEUS). on the ship. Daily demand for the Panama Canal is estimated to be: P (Q) = 13-0.0085Q where P is the canal toll charged per TEU, and Q is the quantity of TEUs traveling through the Panama Canal per day, The Panama Canal Authority has estimated its total cost function to be: TC (Q) = 75+ 10Q where Q is the number of TEUs passing through the canal per day. a) (5 points) Determine the price per TEU and the profit-maximizing volume of TEUs for the Panama Canal Authority. Answers may be expressed in either integer or non-integer values. b) (5 points) Using your solution above, forecast the daily profits of the Panama Canal Authority. c) (5 points) What happens to the price per TEU and the profit-maximizing volume of TEUS for the Panama Canal Authority if its daily fixed costs increase from $75 to $150? The Panama Canal Authority operates the Panama Canal to maximize profits for the Panamanian government. Tolls for using the Panama Canal are imposed based the number of twenty foot equivalent units (TEUS). on the ship. Daily demand for the Panama Canal is estimated to be: P (Q) = 13-0.0085Q where P is the canal toll charged per TEU, and Q is the quantity of TEUs traveling through the Panama Canal per day, The Panama Canal Authority has estimated its total cost function to be: TC (Q) = 75+ 10Q where Q is the number of TEUs passing through the canal per day. a) (5 points) Determine the price per TEU and the profit-maximizing volume of TEUs for the Panama Canal Authority. Answers may be expressed in either integer or non-integer values. b) (5 points) Using your solution above, forecast the daily profits of the Panama Canal Authority. c) (5 points) What happens to the price per TEU and the profit-maximizing volume of TEUS for the Panama Canal Authority if its daily fixed costs increase from $75 to $150?
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a Price per TEU and ProfitMaximizing Volume The profitmaximizing condition occurs when Marginal Reve... View the full answer
Related Book For
Behavioral Corporate Finance Concepts And Cases For Teaching Behavioral Finance
ISBN: 9781259277207
2nd Edition
Authors: Hersh Shefrin
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