This homework is about coordination failure and coordination mechanisms. The last two worksheets coincide with material from M&R. Chapter 2 pages 43 - end of chapter on the medical intern matching program. And all of Chapter 3. Transfer pricing starts on page 79.
You must use cell references on the worksheet about Transfer Pricing. The cells may very well be locked. You'll have to figure out which is the right cell. (You can test this by type =CellReference in an unlocked cell and seeing whether the you cell you want to reference is highlighted.)
If you have questions about this homework, please write them as comments to this post.
On the transfer pricing sheet for the question about determing the monoply output (solved by the intersection of marginal revenue and marginal cost) I solved by doing: 248-2*0.5*Q=20+.42*Q and solved for Q=160.56338028.
ReplyDeleteThis answer was incorrect, am I setting up the problem wrong?
This is a little longer to do, but then you can troubleshoot your own solution. First, the monopoly solution is where marginal revenue equals marginal cost. Can you write out that solution by hand using the parameters of the problem which are A, B, C, and D and the output, Q? Solve for the optimal Q algebraically. Then substitute for each parameter it's cell reference. When you've done that do it in the Excel and paste into the appropriate cell to see if you get the right answer.
DeleteDoing it this way, you can see whether you had the wrong formula or if you actually had the right formula but weren't using cell references for the parameters.
I tried using cell references, and I'm still not coming up with the right answer.
DeleteAre we just supposed to set the MR(Q) equation = MC(Q) equation
Deletesolvig for Q, using cell references for A, B, C and D?
Yes - have you done that?
DeleteI'm in need of a nap so will be offline for a while. I should be back later in the afternoon.
I'm solving with the following set up:
DeleteMR(Q)=MC(Q)
C+D*Q=A-2*B*Q
20+0.42*Q=248-2*0.5*Q
20+0.42Q=246(0.5)(Q)
20+0.42Q=123Q
then in excel I put:
=cell ref. C/((cell ref. A-2)(cell ref. B)-cell ref. D)
and I'm still not getting the right answer, and I'm still unsure what I'm doing wrong
C+D*Q=A-2*B*Q Can you solve this algebraically?
Delete(2*B+D)*Q = A-C so
Q = (A-C)/(2B+D).
Then plug in the cell references for the parameters. This is the approach for each of the questions, but you need to some algebra first.
For the question about quantity supplied by the upstream division, don't you set "price given=c+dq"? My price was 69.93, C=16 D=1.09. So I set the equation as 69.93=16+1.09q. But it says incorrect.
ReplyDeleteAlso for the next question saying "While the quantity demanded by the downstream division is given by?", What is this question asking...?
DeleteAre you using cell references or typing in numbers? You should be using cell references.
DeleteRegarding Simon Kuznets' second question, this in on the part where there is an external competitive market. The prior question asks how much the upstream division will supply at this price. The question you are inquiring about asks how much the downstream division will demand at that price.
DeleteStill says incorrect with cell reference.. We are supposed to plug numbers in the marginal cost equation right? I don't understand why I am keep getting incorrect..
DeleteI am also stuck on these two problems.
ReplyDeleteI thought using the Marginal Cost (Market Price = C +DQ) for quantity supplied by the upstream division and Marginal Benefit (Market Price = A-BQ) for quantity demanded by the downstream division would be the correct equations. I solve for Q in both equations and enter my answers as formulas (Quantity Supplied =50.23/0.7 and Quantity Demanded =-203.77/-1.07) but my answers are still incorrect. I do not understand why these are not the correct answers.
My Market Price is 67.23
A= 271
B= 1.07
C= 17
D= 0.7
Why are you typing decimals? What was the lesson from the Tutorial homework?
DeleteI have the same problem as David Ricardo and Simon Kuznets and used the same process. Is the process of setting Market Price Below Internal Transfer Price equal to Marginal Cost correct?
DeleteIf the market price is greater than C, the intercept of the upstream division's supply curve, then what the upstream division supplies at the market price is indeed what you said. However, when the market price is below C, the upstream division supplies zero at the market price.
DeleteThe excel homework says my quantities are still incorrect even after converting them into fractions.
DeleteDavid, I don't think he means to use fractions, I think he means use cell references instead. So instead of ".7" write N259.
DeleteThis comment has been removed by the author.
ReplyDeleteI am stuck on the last two problems as well. I have strictly used cell references and read through everything you've posted here and still cannot figure it out.
ReplyDeleteIf anyone else is struggling, I've figured out the last two:
ReplyDeleteFor the first, I simply found the inverse of the marginal cost curve (i.e, switching the variables so that what you find is the Q rather than the P) and then plugged the market price into the P. You HAVE to use cell references for every single number (even the market price, which for me was F255). I did the exact same thing for the last question, but with the marginal benefit curve equation instead. Hope this helped a little.
It worked! Thank you!
Delete