Oldton pizzeria & taxi service

I'm sure you've probably found this already Tim - but here's a piece of homework featuring Oldton... the url is at the end...

We know that there is a fish & chip shop in oulton broad of great repute (we must meet there for some) but is there a pizzeria... and I'd love to be the proud owner of a Gucci pizza... or a Gucci haddock... would go nicely with the handbag...

paul

------------------------------------------------------------------------------------------ Veterans’ Taxi is the only taxi service in the village of Oldton. The inverse

demand for its services-which includes running people to the local pizzeria

for take-away orders- is given by PT = 26-0.5T -PZ, where PT is the price

of a taxi trip, T is the number of such trips sold. and PZ is the price of a

pizza. The firm incurs in a marginal cost per taxi trip of $6. Bert Gucci

runs the only pizza parlor in town. The inverse demand curve for pizzas

is PZ = 15 - 0.2Z - 0.4PT . The marginal cost of pizza is constant at $4.

a)Calculate the profit maximizing prices for taxi services and pizzas when

each firm acts independently and sets a price that does not take into account

the impact that that price has on the other firm’s demand

b)What price combination would maximize the joint profits of each firm?

http://www.econ.umn.edu/~nicolas/homework3.pdf