Indigo construction inc. agrees to construct a boat dock at the smooth sailing marina for $43,700. in addition, under the terms of the contract, smooth sailing will pay indigo a performance bonus of up to $12,000 based on the timing of completion. the performance bonus will be paid fully if construction is completed by the agreed-upon date. the performance bonus decreases by $2,400 per week for every week beyond the agreed-upon completion date. indigo has constructed a number of boat docks under similar agreements. indigo’s management estimates, that it has a 60% probability of completing the project on time, a 20% probability of completing the project one week late, and a 20% probability of completing the project two weeks late. management does not believe the project will be more than two weeks late. determine the transaction price that indigo should compute for this agreement. transaction price $

Suppose that two firms produce differentiated products and compete in prices. as in class, the two firms are located at two ends of a line one mile apart. consumers are evenly distributed along the line. the firms have identical marginal cost, $60. firm b produces a product with value $110 to consumers.firm a (located at 0 on the unit line) produces a higher quality product with value $120 to consumers. the cost of travel are directly related to the distance a consumer travels to purchase a good. if a consumerhas to travel a mile to purchase a good, the incur a cost of $20. if they have to travel x fraction of a mile, they incur a cost of $20x. (a) write down the expressions for how much a consumer at location d would value the products sold by firms a and b, if they set prices p_{a} and p_{b} ? (b) based on your expressions in (a), how much will be demanded from each firm if prices p_{a} and p_{b} are set? (c) what are the nash equilibrium prices?

The purchasing agent for a company that assembles and sells air-conditioning equipment in a latin american country noted that the cost of compressors has increased significantly each time they have been reordered. the company uses an eoq model to determine order size. what are the implications of this price escalation with respect to order size? what factors other than price must be taken into consideration?

After the price floor is instituted, the chairman of productions office buys up any barrels of gosum berries that the producers are not able to sell. with the price floor, the producers sell 300 barrels per month to consumers, but the producers, at this high price floor, produce 700 barrels per month. how much producer surplus is created with the price floor? show your calculations.