Musashi owns and operates a hot dog stand in downtown Chicago. In order to operate his hot dog stand, regardless of the number of hot dogs sold, Musashi must purchase a permit from the local government in Chicago. Musashi's initial profit hill is plotted in green (triangle symbols) on the following graph. Suppose the price Musashi must pay for a permit increases by $80 per day. On the following graph, use the purple diamond symbols to plot Musashi's new profit hill, for 0, 10, 20, 30, 40, 50, 60, and 70 hot dogs, after the increase in the price of a permit (with all other factors remaining constant). Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. TOTAL PROFIT (Dollars per day) 400 350 300 250 200 150 100 50 -50 -100 -150 -200 0 10 20 30 40 50 60 QUANTITY (Hot dogs per day) 70 Initially, Musashi's profit-maximizing level of output is level of output is hot dogs per day. Initial Profit Hill 80 New Profit Hill Based on the graph, you can tell that Musashi initially faces a fixed cost of $ (?) per day. hot dogs per day. After the price of a permit rises, Musashi's profit-maximizing

Musashi owns and operates a hot dog stand in downtown Chicago. In order to operate his hot dog stand, regardless of the number of hot dogs sold, Musashi must purchase a permit from the local government in Chicago. Musashi's initial profit hill is plotted in green (triangle symbols) on the following graph. Suppose the price Musashi must pay for a permit increases by $80 per day. On the following graph, use the purple diamond symbols to plot Musashi's new profit hill, for 0, 10, 20, 30, 40, 50, 60, and 70 hot dogs, after the increase in the price of a permit (with all other factors remaining constant). Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. TOTAL PROFIT (Dollars per day) 400 350 300 250 200 150 100 50 -50 -100 -150 -200 0 10 20 30 40 50 60 QUANTITY (Hot dogs per day) 70 Initially, Musashi's profit-maximizing level of output is level of output is hot dogs per day. Initial Profit Hill 80 New Profit Hill Based on the graph, you can tell that Musashi initially faces a fixed cost of $ (?) per day. hot dogs per day. After the price of a permit rises, Musashi's profit-maximizing

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter2: Productions Possibilities, Opportunity Costs, And Economic Growth

Section: Chapter Questions

Problem 10SQP

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Suppose that managers at Honda are deciding how to price the new Honda Accord. The managers estimate that their total costs increase by $20,000 for each car they produce. They also estimate the demand curve they face; it is described by the equation: Q = -0.4 P + 16,000, where Q represents the quantity of Honda Accords they will sell and P represents the price they charge in US dollars. We can re-write that demand curve as: P = 40,000 - 2.5 Q. Take every possibly quantity that the managers might choose between 0 and 7,000 in units of 100. For each possible quantity, calculate the associated price the managers would need to charge, the revenue they would earn, and the total costs. You can then calculate profits for each level of quantity. Highlight the cell that contains the highest value of profit.
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