Question 5: Jimmy has a room that overlooks, from some distance, a major league baseball stadium. He decides to rent a telescope for $50 a week and charge his friends and classmates to use it to peep at the game for 30 seconds. He can act as a monopolist for renting out "peeps". For each person who takes a 30 second peep, it costs Jimmy $.20 to clean the eyepiece. Jimmy believes he has the following demand for his service: Price of a Peep $1.20 Quantity of peeps demanded 1.00 90 100 150 200 250 300 70 60 50 350 40 30 400 450 20 10 500 550 a) For each price, calculate the total revenue from selling peeps and themarginal revenue per peep. Price Quantity TR MR $1.20 100 90 100 150 200 70 250 60 300 350 50 40 30 400 450 20 500 10 550 b) At what quantity will Jimmy's profit be maximized? What price will he charge? What will his total profit be? c) Jimmy's landlady complains about all the visitors coming into the building and tells Jimmy to stop selling peeps. Jimmy discovers, though, if he gives the lady $.20 for every peep he sells, she will stop complaining. What effect does this bribe have on the marginal cost per peep? What is the new profit maximizing equilibrium quantity of peeps? What effect does the bribe have on Jimmy's profits (all these answers should be numbers)? a) cteristics of each market structure to explain why this relationship might exist,

Disney operates two theme parks in California: Disneyland and California Adventure. Disney has long charged the same price for the two parks, currently $400 per day for a four-person family. However with fewer tourists and more local visitors over the past year, Disney is considering park-specific pricing along with a “weekender” bundle. Disney media have different appeal to boys and girls, which affects demand for theme parks. Disney estimates demand for three family types: Boy (B), Girl (G) and Mixed (M). Each family buys at most one ticket of each type, and there are 1 million families of each type each month. Maximum willingness to pay for each park for each family is shown in the table below. Assume the marginal cost per family per park is $150. Family Type Disneyland (DL) CA Adventure (CA) Bundle G $700 $200 $900 M   $300 $300 $600 B $200 $500 $700 Cost = $150 per family per park a. What are the profit-maximizing prices for Disneyland and California Adventure if tickets are…

The demand curve for the new computer game, Rock and Roll Trivia, is given as follows: Q=200-5P-.1 Pc-.5Pd+.2A+I Where P is the price of the game, Pc is the price of a computer, Pd is the price of a diskette, A is the level of advertising, and Q is the level of income. From this demand curve, one can infer that: A. computers and Rock and Roll Trivia are substitutes. B. computers are a normal good. OC. Rock and Roll Trivia is an inferior good. D. computers and Rock and Roll Trivia are complements.

Randall owns a small bakery. During his first few months in business, he charged $4 for each specialty cupcake, averaging sales of about 200 cupcakes each week. When Randall dropped the price one month to $3 each, he sold nearly 500 each week. These results are consistent with the economic concept of demand. True or False True False

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A good with no close substitutes is predicted to have relatively inelastic demand, since consumers cannot easily switch to a substitute good if the price of the good were to increase. The price elasticity of demand of a good depends in part on its relative necessity in comparison to other goods. Assume the following goods all have approximately the same price. Which of the goods has the most elastic demand? The price elasticity of demand for a good also depends on how the good is defined. Self-driving cars Access to medicine for individuals with chronic illnesses Using the following table, organize the goods by indicating which you predict to have the most elastic demand, the least elastic demand, and the elasticity of demand that falls somewhere in between. Categories Most Elastic In Between Least Elastic O O Food Produce Strawberries O The price elasticity of demand of a good is also impacted by the defined time horizon. All else equal, the demand for natural gas will tend to be less…

Exercise A.9 You are an executive of Super Computer, INC. (SC), which rents supercomputers. SC receives a fixed rent for a period of time in exchange for the right use unlimited computers equal to P cents per second. SC has two types of potential clients of equal numbers: 10 companies and 10 academic institutions. Each company has the demand function Q = 10 - P, where Q is expressed in millions of seconds per month; each academic institution has the demand Q = 8 - P. The marginal cost to SC of additional computer utilization is 2 cents per second, regardless of volume. a) Suppose you can distinguish companies from academic clients. What rental and usage fee would you charge each group? Calculate the profits you would get? b) Suppose that you cannot separate the two types of customers and that you did not charge a rental fee. What usage quota would maximize your profits? How many benefits would you get?

Suppose you did an analysis regarding the sensitivity of tea to the price of tea. You estimated the price elasticity of demand to equal 0.5. Explain this finding

Suppose that as the price of Y falls from $3.00 to $2.80, the quantity of Y demanded increases from 200 to 210. Then the absolute value of the price elasticity (using the midpoint formula) is appraximately Multiple Choice 15 1.41 0.71 0.5

The director of a recreation center in a small college town is considering changing the way he prices access cards. He has hired an economic consulting firm to estimate the demand for access cards. The firm has classified people who go the recreation center into two groups, and has come up with two demand functions. The demand curves for the general public (Q) and students (Q,) are given below: Q = 700 – 4P Q, = 1,300 – 5P a. If the current price of access cards is $100, identify the quantity demanded by each group. b. Find the price elasticity of demand for each group at the current price and quantity. c. Is the director maximizing the revenue he collects from card sales by charging $100 for each card? Explain. d. What price should he charge each group if he wants to maximize revenue collected from card sales? Check whether the new total revenue is indeed greater than the old one.