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- 250 225 Revenue Lost 200 175 150 Revenue Gained 125 Demand 100 75 50 25 3 4 7 8 9. 10 QUANTITY (Fire engines) Gilberto increase production from 7 to 8 fire engines because the dominates in this scenario. True or False: If Gilberto's Fire Engines were a competitive firm instead and $100,000 were the market price for an engine, decreasing its price from $100,000 to $50,000 would result in the same change in the production quantity and, thus, total revenue. O True O False acer Σ 2. 1. PRICE (Thousands of dollars per fire engine)Suppose a science museum charges $15 for admission, and each day 200 adults visit the museum. Suppose the museum directors cannot change the price they charge, but they know that for every $1000 a day spent on advertising they can increase demand by 50 tickets. The cost of operating the museum for a day is $2,000. Which of the following advertising choices should they make to maximize profits? O Spend $100O0 a day on advertising O Spend $2000 a day on advertising O Spend no money on advertising O Spend $3000 a day on advertisingPaolo's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Paolo produced eight fire engines, but he has decided to increase production to nine fire engines. The following graph shows the demand curve Paolo faces. As you can see, to sell the additional engine, Paolo must lower his price from $75,000 to $50,000 per fire engine. Note that while Paolo gains revenue from the additional engine he sells, he also loses revenue from the initial eight engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial eight engines by selling at $50,000 rather than $75,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $50,000. PRICE (Thousands of dollars per fire engine) 250 225 200 175 150 125 100 75 50 25 thinin 0 3 4 5 6 7 QUANTITY (Fire engines) a Demand Revenue…
- To Coal Coal FROM Valley Coaltown Junction Coalsburg Supply 50 30 60 70 Morgantown 30 5 35 20 20 80 10 Youngstown 100 Pittsburgh Demand 30 45 40 90 90 20 60 40 80 30 5 25 20 20 20 25 120 What is the improvement index for Youngstown to Coal Valley? O a. -70 O b. 130 O c. -80 O d. 160 O e. 100 27The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Smitten, a perfectly competitive firm that produces children's mittens in a competitive market. Smitten's Production Costs Marginal Cost (dollars) $1.60 Quantity (pairs of Average Total Cost |(dollars) $2.2 mittens) 25 30 2.00 2.17 35 2.45 2.21 40 3.55 2.38 45 4.00 2.56 50 5.50 2.85 55 6.00 3.14 60 8.50 3.58 Instructions: In part a, enter your answer as a whole number. In parts b, c and d, round your answers to 2 decimal places. a. If the market price of children's mittens is $6.00 per pair, how many pairs of children's mittens should Smitten produce per week to maximize its profits? 6 pairs of mittens b. When the market price is $6.00, what is Smitten's average total cost at the profit-maximizing quantity of children's mittens? c. What are Smitten's weekly profits if the market price is $6.00 per pair and the firm produces the profit-maximizing quantity of mittens? %24 %24Price and cost (dollars per ride) The graph shows the market for the two zipline firms that operate in a resort city. If the firms decide to compete, then together they will produce rides at a price of per ride. 60 O A. 400: $30 MC O B. 400; $50 50 O C. between 200 and 400: between $30 and $50 40 O D. 200: $30 O E. 200; $50 30 20 'D 10 MR 100 200 300 400 500 Quantity (number of rides)
- 3. The components of marginal revenue Nick's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Nick produced eight fire engines, but he has decided to increase production to nine fire engines. The following graph shows the demand curve Nick faces. As you can see, to sell the additional engine, Nick must lower his price from $80,000 to $40,000 per fire engine. Note that although Nick gains revenue from the additional engine he sells, he also loses revenue from the initial eight engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial eight engines by selling at $40,000 rather than $80,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $40,000. PRICE (Thousands of dollars per fire engine) 200 180 160 140 120 100 Nick 0 1 2 4 Y 5. 6 QUANTITY (Fire…Raphael's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Raphael produced eight fire engines, but he has decided to increase production to nine fire engines. The following graph shows the demand curve Raphael faces. As you can see, to sell the additional engine, Raphael must lower his price from $80,000 to $40,000 per fire engine. Note that while Raphael gains revenue from the additional engine he sells, he also loses revenue from the initial eight engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial eight engines by selling at $40,000 rather than $80,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $40,000. 200 180 160 Revenue Lost 140 120 Revenue Gained 100 80 Demand 60 40 20 2 3 4. 6. 7 8 9 10 QUANTITY (Fire engines) PRICE (Thousands of…Sean's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Sean produced five fire engines, but he has decided to increase production to six fire engines. The following graph shows the demand curve Sean faces. As you can see, to sell the additional engine, Sean must lower his price from $160,000 to $120,000 per fire engine. Note that while Sean gains revenue from the additional engine he sells, he also loses revenue from the initial five engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial five engines by selling at $120,000 rather than $160,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $120,000. (? 200 180 Demand Revenue Lost 160 * 140 120 Revenue Gained 100 80 60 (Thousands of dollars per fire engine)
- 4. Problems and Applications Q6 You live in a town with 300 adults and 200 children, and you are thinking about putting on a play to entertain your neighbors and make some money. A play has a fixed cost of $2,000, but selling an extra ticket has zero marginal cost. Here are the demand schedules for your two types of customers: Price (Dollars) 10 9 8 7 55 6 4 3 2 1 0 Adults (Tickets) 0 100 200 300 300 300 300 300 300 300 300 To maximize profit, you would charge $ Now you set a price of $ Children Children (Tickets) 0 0 0 0 100 200 200 200 200 200 The city council passes a law prohibiting you from charging different prices to different customers. You, the Producer for an adult's ticket and $ for all tickets, resulting in $ for a child's ticket. Total profit in this case would be $ in profit. Indicate whether each of the following groups of people is better off, worse off, or the same because of the law prohibiting price discrimination. Group of People Better Off Worse Off Unchanged…Suppose the fixed cost of the play were $1,800 rather than $1,000. Complete the following sentences indicating how this would change your answers to the previous parts. In the presence of price discrimination, the adult price of a ticket would and the child price would . Total profit would to $ If price discrimination were banned and the monopolist continued to produce the play no matter what the profit, the price of a ticket would , and total profit would toGains from Trade - End of Chapter Problem Between 2016 and 2017, Nintendo produced 2.3 million NES Classic Edition mini consoles that sold out almost immediately as they arrived at stores. The retail price of the mini console was $59.99. However, if you were to check eBay at the time, you would see that people were buying the units for $250 each from scalpers. a. The price of $250 tells scalpers O they should continue to buy the console at the store and resell it on eBay for a higher price. they should keep the consoles they have already purchased and hang onto to them, as they will be considered antiques someday. they should no longer buy and resell the consoles because the price on eBay is too high to make a profit. b. Upon observing that the only way to obtain the gaming console is to buy it on eBay for $250, a consumer might do which of the following? Select all that apply. Consider buying another type of gaming console that is cheaper. Approach a family member about sharing the…