Managerial Economics Assignment Help

3. Manhattanville [5 points] It is 2018 and a real estate developer looking to build a huge apartment complex in Manhat-tanville. near the recently finished Columbia Business School campus. Market research shows that there are two types of potential renters in the area: investment banking analysts and Columbia MBA students. There are currently 1000 analysts and 1000 students looking to rent. The complex will have two types of apartments, "Hip" apartments and "Budget" apartments. The long-run monthly marginal cost (including land and amortized construction costs) of a Hip apartment is $750 per month, while the long-run monthly marginal cost of a Budget apartment is $600. Market research tells you that banking analysts are willing to pay $2250 per month for a budget apartment and $3750 per month for a hip apartment. It also indicates that students are willing to pay $1800 per month for a budget apartment and $2400 per month for a hip apartment. The developer is unable to observe the true identity of these renters and cannot charge them different prices for the same apartment. How many of each type of apartment should the developer build and what prices should the developer set? What are the company's monthly profits? Please be sure to explain your answers.