Setting marginal revenue equal to marginal cost to determine the profit-maximizing quantity: 213.3-2.6Q=40,0rQ=65. Substitute the profit-maximizing quantity into the demand equation to determine price: 65=160-0.75P,orP=s126.67. Although a price of $126.67 is charged in both markets,different quantities are purchased in each market. Qy=60-0.25026.67)=28.3and 0=100-0.50026.67=36.7. Together,purchased at a price of$126.67 each c.In which of the above situations,(a)or(b),is Sal better off?In terms of e in New York prefer and Sal is better off in the situation with the highest profit.Under the market condition in 8,profit is equal to: Qx)Pvr+QLAPLA-(1.000+40(Qxy +QLA).or π=(25)S140)+(40)S120)-(1.000+4025+40)=84.700 Under the market conditions in 86,profit is equal to: π=QP.(1,000+40Q)or 元=(126.67(G5)-(1,000+(40)65)=$4633.33. Therefore,Sal is better offwhen the two markets are separated. Consumer surplus is the area under the demand curve above price.Under CSy=(0.5240.14025)=s1250and CSL4=(0.5)200·120)(40)=$1600. Under the market conditions in 86 the respective consumer surpluses are CS=(0.5240-126.67)28.3)=$1603.67and CS=(0.5)200-126.67)36.7)=$1345.67. The New Yorkers prefer 8b because the equilibrium price is $126.67 instead of S140.thus giving them a higher consumer surplus.The customers in Los Angeles prefer 8a because the equilibrium price is $120 instead of 8126.67 9.You are an executive for Super Computer,Ine.C),which rents out super computers.SC receives a fixed rental payment per time period in exchange for the right to unlimited computing at a rate of P cents per second.SC has twoSetting marginal revenue equal to marginal cost to determine the profit-maximizing quantity: 213.3 – 2.6Q = 40, or Q = 65. Substitute the profit-maximizing quantity into the demand equation to determine price: 65 = 160 – 0.75P, or P = $126.67. Although a price of $126.67 is charged in both markets, different quantities are purchased in each market.  QNY = 60 − 0.25(126.67) = 28.3 and  QLA = 100− 0.50(126.67)= 36.7. Together, 65 units are purchased at a price of $126.67 each. c. In which of the above situations, (a) or (b), is Sal better off? In terms of consumer surplus, which situation do people in New York prefer and which do people in Los Angeles prefer? Why? Sal is better off in the situation with the highest profit. Under the market condition in 8a, profit is equal to:  = QNYPNY + QLAPLA - (1,000 + 40(QNY + QLA)), or  = (25)($140) + (40)($120) - (1,000 + 40(25 + 40)) = $4,700. Under the market conditions in 8b, profit is equal to:  = QTP - (1,000 + 40QT ), or  = (126.67)(65) - (1,000 + (40)(65)) = $4633.33. Therefore, Sal is better off when the two markets are separated. Consumer surplus is the area under the demand curve above price. Under the market conditions in 8a, consumer surpluses in New York and Los Angeles are: CSNY = (0.5)(240 - 140)(25) = $1250 and CSLA = (0.5)(200 - 120)(40) = $1600. Under the market conditions in 8b the respective consumer surpluses are: CSNY = (0.5)(240 – 126.67)(28.3) = $1603.67 and CSLA = (0.5)(200 – 126.67)(36.7) = $1345.67. The New Yorkers prefer 8b because the equilibrium price is $126.67 instead of $140, thus giving them a higher consumer surplus. The customers in Los Angeles prefer 8a because the equilibrium price is $120 instead of $126.67. 9. You are an executive for Super Computer, Inc. (SC), which rents out super computers. SC receives a fixed rental payment per time period in exchange for the right to unlimited computing at a rate of P cents per second. SC has two