Gouge-em Cable Company is the only cable television service company licensed to operate in Backwater County. Most of its costs are access fees maintenance expenses. These fixed costs total $640,000 monthly. The marginal cost of adding another subscriber to its system is constant at $2 month. Gouge-em's demand curve can be determined from the data in the accompanying table. Complete the following table by computing the total revenue, total cost, and profit at each of the various subscription prices. Total Cost Profit Number of Subscribers Subscription Price (Thousands Per Month) Total Revenue ($, Thousands) Fixed Cost ($, Thousands) ($, Thousands) ($, Thousands) 20 $ $640 $ 40 $640 $ 60 $640 $ 80 $640 $640 $640 $25 20 15 10 5 1 100 150 $ $ $ $ $ $ $ $

Gouge-em Cable Company is the only cable television service company licensed to operate in Backwater County. Most of its costs are access fees maintenance expenses. These fixed costs total $640,000 monthly. The marginal cost of adding another subscriber to its system is constant at $2 month. Gouge-em's demand curve can be determined from the data in the accompanying table. Complete the following table by computing the total revenue, total cost, and profit at each of the various subscription prices. Total Cost Profit Number of Subscribers Subscription Price (Thousands Per Month) Total Revenue ($, Thousands) Fixed Cost ($, Thousands) ($, Thousands) ($, Thousands) 20 $ $640 $ 40 $640 $ 60 $640 $ 80 $640 $640 $640 $25 20 15 10 5 1 100 150 $ $ $ $ $ $ $ $

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter24: Price-searcher Markets With High Entry Barriers

Section: Chapter Questions

Problem 13CQ

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13. Gouge-em Cable Company is the only cable television and Internet service company licensed to operate in Backwater County. Most of its costs are access fees and maintenance expenses. These fixed costs total $6,400,000 monthly. The marginal cost of adding another subscriber to its system is constant at $20 per month. Gouge-em's demand curve can be determined from the data in the accompanying table. NUMBER OF SUBSCRIBERS Subscription Price (PER MONTH) $250 20,000 200 40,000 150 60,000 100 80,000 50 100,000 10 150,000
1. Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and web site construction is estimated to be $160,000. Variable processing costs are estimated to be $6 per book. The publisher plans to sell single-user access to the book for $46. a. Build a spreadsheet model to calculate the profit/loss for a given demand. What profit can be anticipated with a demand of 3,500 copies?b. Use a data table to vary demand from 1,000 to 6,000 in increments of 200 to assess the sensitivity of profit to demand.c. Use Goal Seek to determine the access price per copy that the publisher must charge to break even with a demand of 3,500 copies. d. Consider the following scenarios: Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 Variable Cost/Book $6 $8 $12 $10 $11 Access Price $46 $50 $40 $50 $60 Demand 2,500 1,000 6,000 5,000 2,000 For each of these scenarios,…
Gouge-em Cable Company is the only cable television service company licensed to operate in Backwater County. Most of its costs are access fees and maintenance expenses. These fixed costs total $320,000 monthly. The marginal cost of adding another subscriber to its system is constant at $6 per month. Gouge-em's demand curve can be determined from the data in the accompanying table. Complete the following table by computing the total revenue, total cost, and profit at each of the various subscription prices. Total Revenue ($, Thousands) $ Fixed Cost ($, Thousands) $320 $ $ $ $ $ Number of Subscribers Subscription Price (Thousands Per Month) $25 20 ! 15 10 O O O 5 1 Gouge-em will charge $5 $10 20 $15 40 60 80 $20 100 150 for its cable services, earning them a profit of $ $320 $320 $320 $320 $320 Now suppose the Backwater County Public Utility Commission has the data and believes that cable subscription rates in the county are too expensive and that Gouge-em's profits are unfairly high.…
12. Mr. Farmer has been in the business of selling cheddar cheese for almost three years, and thus far has been able to control the volume of the product by varying the selling price. He is seeking to maximize its net profit. It has been concluded that the relationship between price and demand per month is approximately D = 2500 - 10p, where p is the price per unit in dollars. The fixed cost is $ 1,100 per month, and the variable cost is $15 per unit. What is the optimal no. of units that should be produced and sold per month? What is the maximum profit per month? What are the breakeven sales quantities (range of profitable demand) ?
2. You have developed a self-study certification system for those who need credit hours for recertification by your state's social welfare office. The system operates at virtually no cost, i.e., there is no marginal cost. A marketing research team has assembled the following sale information: Online Self Study Certifications for Social Work License Certification Certification in Online Counseling as a Group Home Counselor TR Counseling TR Group Home Segment 1 Segment 2 Segment 3 Segment 4 Customers 1000 1000 1000 $190 $150 $95 1000 $35 $70 $90 $160 $195 Bundle $260 $240 $255 $230 TR Bundle
15.9 (0) The demand function for football tickets for a typical game at a large midwestern university is D(p) = 200, 000 – 10, 000p. The university has a clever and avaricious athletic director who sets his ticket prices so as to maximize revenue. The university's football stadium holds 100,000 spectators. (a) Write down the inverse demand function.. (b) Write expressions for total revenue and mar- ginal revenue as a function of the number of tickets sold. (c) On the graph below, use blue ink to draw the inverse demand function and use red ink to draw the marginal revenue function. On your graph, also draw a vertical blue line representing the capacity of the stadium. Price 30 25 20 15 10 20 40 60 80 100 120 140 160 Quantity x 1,000 (d) What price will generate the maximum revenue? What quantity will be sold at this price?. (e) At this quantity, what is marginal revenue?. At this quantity, what is the price elasticity of demand?. Will the stadium be full?
32.23 Millie Bush has written a best-seller. Revenues net of production costs are $3007¹/34¹/3 where T is the number of publicity trips Millie takes and A is the number of ads for the book that appear. Millie has to pay for all of her own publicity trips, which cost $100 each. Her publisher pays for the advertising, which costs $100 per ad. Revenues from the book are split equally between Millie and her publisher. Let T1 be the number of trips that Millie would choose to make in a Nash equilibrium where she chooses the number of trips and the publisher chooses the amount of advertising. Let T2 be the number of trips that Millie should make if trips and advertising are determined so as to maximize total profits net of trip and ad costs. (a) T1 = 1 and 72 = 1. (b) T1 = 1 and 72 = 2. (c) T1 = 2 amd T2 = 1. (d) T1 = 1 and T2 = 1/8. (e) T1 1/8 and T2 = 1.
Sampson Ltd produces two products that can be produced on either of two machines. Each month, only 5o0 hours of time are available on each machine. The time required to produce each item by hour and machine is: Machine Machine Product 1 Product 2 3 4 Month Month 1 Month 2 Month 1 Demand Demand Price Price Product 1 100 160 $45 $65 $10 Product 2 120 110 $35 The demand and price point for each product that customers are willing to pay are above. The company goal is to maximize revenue from sales from the next two months. Based on the provided information, how many constraints does this problem have excluding the non-negativity constraints?
Tennis Products, Inc., produces three models of high-quality tennis rackets. The following table contains recent information on the sales, costs, and profitability of the three models: Average Quantity Current Total Variable Cost Contribution Margin Contribution Sold Price Revenue Per Unit Per Unit Margin* Model (Units/Month) ($) ($) ($) ($) ($) 15,000 30 450,000 15.00 15 225,000 В 5,000 35 175,000 18.00 17 85,000 10,000 45 450,000 20.00 25 250,000 Total $1,075,000 $560,000 *Contribution to fixed costs and profits. The company is considering lowering the price of Model A to $27 in an effort to increase the number of units sold. Based on the results of price changes that have been instituted in the past, Tennis Products' chief economist estimates the arc price elasticity of demand to be -2.5. Furthermore, she estimates the arc cross elasticity of demand between Model A and Model B to be approximately 0.5 and between Model A and Model to be approximately 0.2. Variable costs per unit are…
3. Suppose Microsoft is selling the two products to the individuals below with their willingness to pay for each item as in the table. Suppose the costs of producing each item is $10 for both products. Find the maximum profit of Microsoft if it can sell with either unit pricing, pure or mixed bundle prices for these items. TIT Word Processor Spreadsheet Alice 20 10 Ben 40 30 Chris 80 70 Daniel 60 50
17 of 16 BNW is one of many producers of luxury wheelchairs, which are differentiated to appeal to different market niches. BNW's Price per chair relevant demand and cost curves are depicted in the graph. $2,000 Average total Use this graph to answer the questions. Assume that there are 1,800 Marginal cost no significant barriers to entry. cost 1,600 Determine BNW's profit-maximizing price and quantity. 1,400 1,200 1,000 price per chair: $ 800 600 400 quantity of chairs: chairs 200 Demand Marginal revenue 100 200 300 400 500 600 700 800 900 Calculate BNW's profit. Chairs per week BNW's profit: $
Forty thousand potential customersof a cable TV franchise are each willing to pay $11/month for HBO and $11/month for Cinemax. Twenty thousand potential customers are willing to pay $20/month for HBO and only $5/month for Cinemax. Assume costs are zero. If the franchise sells the two services in a bundle, it should charge1: $312: $253: $224: $205: $18