Question: 1 . Using the formulas given in equations ( 1 2 . 8 ) and ( 1 2 . 9 ) , develop an expression

1. Using the formulas given in equations (12.8) and (12.9), develop an expression for the total profit contribution as a function of the price of cars and the price of light trucks. Assume the marginal cost for passenger cars is 15 and the marginal cost forlight trucks is 17.2. Using Excel Solver or LINGO, find the price for each car so that the total profitcontribution is maximized. 3. Given the prices determined in Question 2, calculate the number of passenger carssold and the number of light trucks sold. 4. Duplicate the spreadsheet in Figure 12.17. Your spreadsheet should have formulas in cells D3:D5 and B7 and be able to calculate the harmonic (CAFE) average forany MPG rating and any number of vehicles in each category. 5. Again, assuming that passenger cars get 30 MPG and light trucks get 20 MPG,calculate the CAFE average for the fleet size from Question 3.6. If you do the calculation in Question 5 correctly, the CAFE average of the fleet is 23.57. Add a constraint that the fleet average must be 25 MPG and re-solve the modelto get the maximum total profit contribution subject to meeting the CAFE constraint.

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