Humana hospitals in 1991 charged very high prices relative to their marginal costs. For example, Humana's Suburban Hospital in Louisville charged patients $103.6 for a pair of crutches that cost the hospital $8.35 (Douglas Frantz, "Congress Probes Hospital Costs-$9 Tylenols, $118 Heat Pads," San Francisco Chronicle, Octob 18, 1991: A2). Calculate the hospital's pricelmarginal cost ratio, its Lerner Index, and the demand elasticity, e, that it faces for a pair of crutches (assuming that it maximizes its profit). What is Humana's pricelmarginal cost ratio? The price to marginal cost ratio is. (round your answer to two decimal places)
Q: You are given the following cost data: The total fixed costs are $100. (Photo) If the price of…
A: Total cost: It means the actual cost incurred in the production of a given level of output.
Q: Answer questions below using the cost curves for the price-taking firm shown in the following graph:…
A: The total variable cost(TVC)is basically the amount of output multiplied by the variable expense per…
Q: Abe grows beautful orchids. His total fixed cost is $144 a day, and his average variable cost is $1…
A: Abe grows beautiful orchids. his total fixed cost is $144 aday, and his average variable cost is…
Q: In the accompanying graph, place • point A along the portion of the LRATC curve where a firm…
A: In economics, the short-run is defined as the time period during which at least one factor of…
Q: Humana hospitals in 1991 charged very high prices relative to their marginal costs. For example,…
A: Given : Marginal Cost = $8.35 Price = $103.65
Q: Given the information from the graph below, draw the cost curve of the firm showing the minimum…
A: At Q1= 100 (L,K) = (25,25) Q2= 200, (L,K) = (50,50) Q3= 300, (L,K) = (75,75) At cost minimization…
Q: Suppose Larry runs a small business that manufactures shirts. Assume that the market for shirts is a…
A: In perfectly competitive markets, there are many sellers which produce homogenous good and sells…
Q: Find the value of A,B,C,D & E. Add $8 with FC. New FC=$10, now assuming quantity and variable…
A: Quantity(Q) FC VC TC AFC AVC ATC MC 0 2 0 2 - 0 1 2 1 3 2 1 3 1 2 2 1.8 3.8 1 0.9 1.9 0.8…
Q: Jeannette has a wheat farm, and the wheat market is perfectly competitive. The market price of a…
A: Total Cost is the sum of variable and fixed cost. TC= VC+FC Average variable cost is the per unit of…
Q: 1) Consider an independent pizza shop. List at least 5 explicit costs. 2) Consider an independent…
A: Explicit cost is the one that is actually incurred by a firm. It includes the out-of-pocket…
Q: What is the value of the average cost? If the price in the market of the perfect competitive firm…
A: Profit maximizing quantity is where marginal revenue equals marginal cost.
Q: Assume demand is: P = 76 – and total cost is: TC = 20 + Q² What is the quantity that maximizes…
A: Profit maximize quantity is the quantity where MR is equals to MC , here we calculate the MR and MC…
Q: For each price in the following table, calculate the firm's optimal quantity of units to produce,…
A: In a competitive market, there are large number of firms selling identical products. Firm's ATC is…
Q: If the price at which Jeannette can sell wheat is $16/bu., will Jeannette earn a profit in the short…
A: The perfectly competitive market produces homogeneous products. There are numerous firms in the…
Q: Jeannette has a wheat farm, and the wheat market is perfectly competitive. The market price of a…
A: Divide the fixed costs of production by the price per unit minus the variable costs of production to…
Q: For each price in the following table, calculate the firm's optimal quantity of units to produce,…
A: According to the given graph, at P = 25, Quantity is taken from minimum of AVC which is, Q = 30000.…
Q: Francis wants to buy some paintings for their store to make it feel more classy. Francis would need…
A: Answer: Correct option: option (a) Explanation: Francis would count this as an explicit cost of…
Q: For each price in the following table, calculate the firm's optimal quantity of units to produce,…
A: MC = AVC , is shut down point for firm as the firm will not benefit from continuing the production.…
Q: Use the data below to answer the questions: Price Quantity Demanded Total Revenue Marginal Revenue…
A: Marginal cost of production is the change in total cost of production due to production of one…
Q: Consider the competitive market for sports jackets. The following graph shows the marginal cost…
A: Marginal cost: The marginal cost is the incremental cost involved in producing one more unit of an…
Q: For each price in the following table, calculate the firm's optimal quantity of units to produce,…
A: When P is $25, Quantity is taken from minimum AVC which is 30,000When P is $70, Quantity is taken…
Q: For each price in the following table, calculate the firm's optimal quantity of units to produce,…
A: Given: To Find: The firm's optimal quantity of units and the profit/loss: If the price is below,…
Q: 1] Briefly explain under what conditions would the total cost curve be horizontal.
A: (Since you have asked many questions, we will solve the first one for you. If you want any specific…
Q: ohnson produces bottles. Suppose q is the quantity of bottles produced. Her Total Costs are given by…
A: Average cost = total cost/ q take first order and second order condition for minimum value of…
Q: A train track runs through a rancher's land. Each time a train runs on the track, it causes one of…
A: *ANSWER :-
Q: With the following data: Quantity=2,000 Variable costs= $2,000 Fixed costs= $10,000 Price= $1…
A: The total cost incurred by a firm operating in a market includes fixed costs and variable costs.…
Q: tuey the VP for advertising at the Meg-low Mart is trying to sell Meg-Low Mart Body Spray for $1.99…
A: Following is the given information: Given the selling price of Spray = $1.99 per unit Variable cost…
Q: Bob's lawn mowing service is a profit maximizingcompetitive firm. Bob mows lawns for $27 each. His…
A: A competitive firm is one that is a price taker and can sell any quantity of goods at the given…
Q: 1. A firms total cost curve is given by TC(q) = q(q 4)2 + 2q.a) What is the formula for its AC…
A: TC(q) = q(q - 4)2+ 2q. We know, Average cost (AC) = TC/q AC = (q(q - 4)2+ 2q) / q AC = (q - 4)2+ 2…
Q: Michael Scott's recently founded paper company, aptly named "Michael Scott Paper Company" sets the…
A: Given Information Total Cost = 3q +10Price = $5.5/reamTotal Revenue = $34,100
Q: The graph below represents sales per week of ABC Inc. Ltd, a monopoly multinational enterprise that…
A: Monopoly is a structure of market in which there is only one firm producing commodity and has market…
Q: For the pizza seller whose marginal, average variable, and average total cost curves are shown in…
A: In the given market, price is constant so it will be equal to marginal revenue. At profit…
Q: Suppose a factory's marginal cost has a minimum value of $2; its average variable cost has a minimum…
A: find below the answer.
Q: 100 90 70 ATC 30 AVC 20 MCO 10 10 20 40 s0 100 QUANTITY (Thousands of jackets) For each price in the…
A: Perfect Competition refers to the form of market in which there is a large number of buyers and…
Q: (i) Will this firm produce in the short run? (Click to select) No Yes (ii) If it is…
A: “Hey, since there are multiple sub part questions posted, we will answer the first three subpart…
Q: Consider the competitive market for sports jackets. The following graph shows the marginal cost…
A: The total cost incurred by a firm operating in a market includes fixed costs and variable costs.…
Q: A firm’s cost curves are given in the following table. (Photo) Complete the table. If the total…
A: Cost refers to the overall value of goods and services that producers spent in order to produce the…
Q: Use the cost schedule below to answer the following questions about a price-taking firm who produces…
A: Total cost is the total sum of the fixed cost, and variable cost of the output produced. Average…
Q: Mehmood’s lawn-mowing service is a profit-maximizing, competitive firm. Mehmood mows lawns for…
A: 1. In short run TR > VC Or - continue TR = P×Q 2.in long run TR < TC Or - exit P < AVC…
Q: A manufacturing firm has a total cost curve: TC = 0.2Q3 - 5Q2 + 50Q + 240, and a marginal cost…
A: Protection of good incurred costs. Cost refers to the amount that is incurred for using the factors…
Q: A bakery sells pretzels. The fixed costs come to $8,750.00 per month. It will cost 35 cents to make…
A: Break-even point=Fixed costSelling price-Variable cost
Q: After serving as President of the United States for eight years, Dena has retired from politics and…
A: Dena is being able to cover her variable costs when she produces 8 units infact she is earing…
Q: Comment why is this point significant analytically.
A: Marginal cost is defined as the change in total cost that results from the production of an…
Q: Suppose an avocado farm has cost C= 0.004q + 28q + 1250, (where q is measured in bushels) and the…
A: A competitive market consist of large number of small firms and industry that determines price…
Q: Consider the price-taker market for sports jackets. The following graph shows the marginal cost…
A: in short run and long run the , the firm should continue the business of not it depends on the…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- For many decades, the Royal Mail had a legal monopoly in the U.K. Companies in thepostal business have increasing returns to scale, then constant returns to scale, andthen decreasing returns to scale. The Royal Mail’s minimum average cost is £2 at 100million deliveries and its minimum marginal cost is £1 at 75 million deliveries.The demand for postage is zero at a price of £10, and demand is 300 milliondeliveries at a price of £0. Marginal revenue is zero at a price of £10 and 150 at aprice of £0.Note: Unless otherwise stated, the numerical answers in this question do not need tobe exact but should correspond to how you have drawn your graph. (a) Draw a large graph showing the Royal Mail’s average cost curve and itsmarginal cost curve. Show how many deliveries would be made, and at whatprice, if Royal Mail operated as a monopoly. Show the Royal Mail’s profit orloss on the graph.For many decades, the Royal Mail had a legal monopoly in the U.K. Companies in thepostal business have increasing returns to scale, then constant returns to scale, andthen decreasing returns to scale. The Royal Mail’s minimum average cost is £2 at 100million deliveries and its minimum marginal cost is £1 at 75 million deliveries.The demand for postage is zero at a price of £10, and demand is 300 milliondeliveries at a price of £0. Marginal revenue is zero at a price of £10 and 150 at aprice of £0.Note: Unless otherwise stated, the numerical answers in this question do not need tobe exact but should correspond to how you have drawn your graph. (a) Draw a large graph showing the Royal Mail’s average cost curve and itsmarginal cost curve. Show how many deliveries would be made, and at whatprice, if Royal Mail operated as a monopoly. Show the Royal Mail’s profit orloss on the graph. (b) The government makes a law restricting the price of postage to £1. Show theeffect of this policy in the…For many decades, the Royal Mail had a legal monopoly in the U.K. Companies in thepostal business have increasing returns to scale, then constant returns to scale, andthen decreasing returns to scale. The Royal Mail’s minimum average cost is £2 at 100million deliveries and its minimum marginal cost is £1 at 75 million deliveries.The demand for postage is zero at a price of £10, and demand is 300 milliondeliveries at a price of £0. Marginal revenue is zero at a price of £10 and 150 at aprice of £0.Note: Unless otherwise stated, the numerical answers in this question do not need tobe exact but should correspond to how you have drawn your graph. New technology changes delivery firms’ technology. Now, the minimumaverage cost is £2 at 1 million deliveries and a minimum marginal cost of £1at 0.75 million deliveries. The government removes all price restrictions andallows free entry. Describe the long-term outcome for this market, using twographs, one at the firm-level and one at the…
- For many decades, the Royal Mail had a legal monopoly in the U.K. Companies in thepostal business have increasing returns to scale, then constant returns to scale, andthen decreasing returns to scale. The Royal Mail’s minimum average cost is £2 at 100million deliveries and its minimum marginal cost is £1 at 75 million deliveries.The demand for postage is zero at a price of £10, and demand is 300 milliondeliveries at a price of £0. Marginal revenue is zero at a price of £10 and 150 at aprice of £0.Note: Unless otherwise stated, the numerical answers in this question do not need tobe exact but should correspond to how you have drawn your graph. The government makes a law restricting the price of postage to £1. Show theeffect of this policy in the short-run in a new, large graph. The graph shouldshow the firm’s average cost, marginal cost, marginal revenue, and consumerdemand. How much postage is bought? Show on your graph if the Royal Mailis in profit or loss, and by how much.CareRight Medical Company has invented and received a patent for a new drug to treat a rare and fatal disease. It charges $5,000 for a year’s supply of the drug. Critics claim that this amount is excessive, as it does not cost that much to produce. They believe the company is taking advantage of sick people. CareRight responds that they are losing money on this drug. The critics are right: It does not cost CareRight $5,000 to produce a year’s supply for one person. However, CareRight’s statement is also correct in that they are losing money on the drug. How can both statements be true? Consider the different types of costs in your answer.Tim Marlow, the owner of The Clock Works, wanted to know how many clocks he must sell in order to cover his fixed cost at a given price. Tim knew that he had a fixed cost of $20,000 for equipment, taxes, and a bank loan. He also had a unit variable cost of $20 per clock for labor, materials, and promotional costs. If the price Tim charges for each of his clocks is $40, what is his break-even point quantity?
- According to W. Gillepse, "A minimum of expenses is of course, highly desirable; but the road which is truly the cheapest is not the one which has cost the least money, but the one which makes the most profitable returns in proportion to the amount expended upon it." Explain the quote based on his economic views.The table below shows the total variable costs faced by Arlo's Eye Care for different quantities of reading glasses sold. QUANTITY TOTAL VARIABLE COST 1 $20 2 $25 3 $35 4 $50 5 $70 6 $95 7 $125 8 $160 9 $200 10 $245 Arlo's Eye Care sells reading glasses in a perfectly competitive market with a downward-sloping demand curve and an upward-sloping supply curve. The market price is $33 per unit, and the total fixed cost is $30. a. Identify the profit-maximizing quantity. Explain using marginal analysis. b. Calculate the economic profit at the profit-maximizing quantity you identified in part. Show your work. c. Based on your answer to part (b), will the number of firms in the industry increase, decrease, or stay the same in the long run? Explain. d. The income elasticity of demand for reading glasses is 1.4, and the cross-price elasticity of demand for sunglasses with respect to the price of reading glasses is -0.75.…Andrea's Day Spa began to offer a relaxing aromatherapy treatment. The firm asks you how much to charge to maximize profits. The demand curve for the treatments is given by the first two columns in the following table; its total costs are given in the third column. Answer the following question accordingly. Price QuantityTC $25.00 $100 $24.00 10 $250 $23.00 20 $420 $22.00 30 $600 $21.00 40 $780 $20.00 50 $970 $19.00 60 $1,170 Total fixed costs in the above table is: Select one: a. $130 b. $10 c. $100 d. Zero
- Andrea's Day Spa began to offer a relaxing aromatherapy treatment. The firm asks you how much to charge to maximize profits. The demand curve for the treatments is given by the first two columns in the following table; its total costs are given in the third column. Answer the following question accordingly. Price QuantityTC $25.00 $100 $24.00 10 $250 $23.00 20 $420 $22.00 30 $600 $21.00 40 $780 $20.00 50 $970 $19.00 60 $1,170 The profit maximizing price in the above table is: Select one: a. $21 b. $24 c. $22 d. $25 ооооAndrea's Day Spa began to offer a relaxing aromatherapy treatment. The firm asks you how much to charge to maximize profits. The demand curve for the treatments is given by the first two columns in the following table; its total costs are given in the third column. Answer the following question accordingly . Price QuantityTC $25.00 $100 $24.00 10 $250 $23.00 20 $420 $22.00 30 $600 $21.00 40 $780 $20.00 50 $970 $19.00 60 $1,170 In order to maximize profit, the above firm should produce where: Select one: a. Marginal Revenue = Marginal Cost b. Price= Average Total Cost C. Price = Marginal Cost d. Economic profit= zeroAndrea's Day Spa began to offer a relaxing aromatherapy treatment. The firm asks you how much to charge to maximize profits. The demand curve for the treatments is given by the first two columns in the following table; its total costs are given in the third column. Answer the following question accordingly. Price QuantityTC $25.00 $100 $24.00 10 $250 $23.00 20 $420 $22.00 30 $600 $21.00 40 $780 $20.00 50 $970 $19.00 60 $1,170 Total revenue of producing 30 units of output from the above table is: Select one: a. $180 b. $435 c. $600 d. $660