Malmo Avionics makes aircraft instrumentation. Its basic navigation radio requires $60 in variable costs and $5,000 per month in fixed costs. Further processing the radio, to enhance its functionality, will require an additional $28 per unit of variable costs, plus an increase in fixed costs of $290 per month. The marketing manager believes that they would be able to increase the sales price of the radio from $290 to $310. Malmo sells 45 radios per month. If Malmo decides to further process the radio, monthly operating income would . (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)

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?