. American Export-Import Shipping Company operates a general cargo carrier servi

Question

. American Export-Import Shipping Company operates a general cargo carrier service between New York and several Western European ports. It hauls two major categories of freight: manufactured items and semimanufactured raw materials. The demand functions for these two classes of goods are: P1=100-2Q1 P2=80-Q2 Where Q1=tons of freight moved. The total cost function for American is: TC=20+4(Q1+Q2) d. What are American's total profits if it is effectively able to charge different prices in the two markets?

Explanation / Answer

TOTAL PROFIT =TOTAL REVENUE- TOTAL COST=P1Q1+P2Q2-(20+4(Q1+Q2)) =(100-2Q1)*Q1+(80-Q2)*Q2-(20+4(Q1+Q2))

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