Stefani company has gathered the following information about its product. direct materials: each unit of product contains 3.40 pounds of materials. the average waste and spoilage per unit produced under normal conditions is 0.60 pounds. materials cost $2 per pound, but stefani always takes the 2.00% cash discount all of its suppliers offer. freight costs average $0.25 per pound. direct labor. each unit requires 1.00 hours of labor. setup, cleanup, and downtime average 0.20 hours per unit. the average hourly pay rate of stefani’s employees is $12.70. payroll taxes and fringe benefits are an additional $2.00 per hour. manufacturing overhead. overhead is applied at a rate of $6.40 per direct labor hour. compute stefani’s total standard cost per unit

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?