Microeconomics (7th Edition)
7th Edition
ISBN: 9780134737508
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 15, Problem 15.3.5PA
Subpart (a):
To determine
Tax effect.
Subpart (b):
To determine
Tax effect.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Tecky Corp is a monopoly in the market of product Y. Suppose you are the marketing manager
of Tecky Corp. You have gathered some information about product Y and the cost of Tecky Corp.
as shown in the table below.
Total cost $
Unit Price $
Total revenue $
Quantity
300
1
680
680
430
560
1,120
592
440
1,320
3
792
4
370
1,480
1,024
1,400
280
1,304
1,260
210
1,626
1,050
150
2,025
100
800
2,432
You are in a meeting with the CEO of Tecky Corp. The CEO asks the following question
A.
during the meeting:
"We should be able to get more revenue as we sell more units. I see the total revenue rises
from the quantity of 1 to 4. However, why does the total revenue start falling from the
quantity of 5 onward?"
Explain to the CEO why this is the case.
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…
The table gives the monthly demand and costs for subscriptions to basic cable for Comcast, a cable television monopoly in Philadelphia. If Comcast maximizes its profit, how much profit will it earn?
Chapter 15 Solutions
Microeconomics (7th Edition)
Ch. 15 - Prob. 15.1.1RQCh. 15 - Prob. 15.1.2RQCh. 15 - Prob. 15.1.3PACh. 15 - Prob. 15.1.4PACh. 15 - Prob. 15.1.5PACh. 15 - Prob. 15.1.6PACh. 15 - Prob. 15.2.1RQCh. 15 - Prob. 15.2.2RQCh. 15 - Prob. 15.2.3RQCh. 15 - Prob. 15.2.4RQ
Ch. 15 - Prob. 15.2.5PACh. 15 - Prob. 15.2.6PACh. 15 - Prob. 15.2.7PACh. 15 - Prob. 15.2.8PACh. 15 - Prob. 15.2.9PACh. 15 - Prob. 15.2.10PACh. 15 - Prob. 15.2.11PACh. 15 - Prob. 15.2.12PACh. 15 - Prob. 15.2.13PACh. 15 - Prob. 15.3.1RQCh. 15 - Prob. 15.3.2RQCh. 15 - Prob. 15.3.3RQCh. 15 - Prob. 15.3.4PACh. 15 - Prob. 15.3.5PACh. 15 - Prob. 15.3.6PACh. 15 - Prob. 15.3.7PACh. 15 - Prob. 15.3.8PACh. 15 - Prob. 15.3.9PACh. 15 - Prob. 15.3.10PACh. 15 - Prob. 15.4.1RQCh. 15 - Prob. 15.4.2RQCh. 15 - Prob. 15.4.3PACh. 15 - Prob. 15.4.4PACh. 15 - Prob. 15.4.5PACh. 15 - Prob. 15.4.6PACh. 15 - Prob. 15.4.7PACh. 15 - Prob. 15.5.1RQCh. 15 - Prob. 15.5.2RQCh. 15 - Prob. 15.5.3RQCh. 15 - Prob. 15.5.4PACh. 15 - Prob. 15.5.5PACh. 15 - Prob. 15.5.6PACh. 15 - Prob. 15.5.7PACh. 15 - Prob. 15.5.8PACh. 15 - Prob. 15.5.9PACh. 15 - Prob. 15.5.10PACh. 15 - Prob. 15.5.11PACh. 15 - Prob. 15.5.12PACh. 15 - Prob. 15.5.13PACh. 15 - Prob. 15.1CTECh. 15 - Prob. 15.2CTECh. 15 - Prob. 15.3CTE
Knowledge Booster
Similar questions
- Help me pleasearrow_forward2. The Ice Cream Lovers Society decided to open up an ice cream stand during the summermonths. They calculated that it would cost them $0.80 to make a scoop of ice cream and$350 a month to operate the stand. They hired a research team who determined that theprice-demand function given in dollars isp x x ( ) = −8 0.02wherexis the number ofscoops sold.a. Find the revenue functionR x( )b. Find the value ofxthat produces the maximum revenue algebraically.c. Find the maximum revenue algebraically.d. Find the price per scoop of ice cream that produces the maximum revenuealgebraically.e. Find the cost functionC x( )that describes the monthly costs of operating the icecream stand.f. Find the break-even points to the nearest scoop algebraically usingR x( )andC x( ) .g. Find the profit functionP x( ).arrow_forward13. You just got a patent for the first commercial self-driving car. The following table shows the elasticity of the demand and the marginal cost of production of your cars in several production centers across the globe. Assuming that this are constant, can you approximate what would be the optimal price for your cars? City Marginal Cost Elasticity Price Wolfburg, Germany Barcelona, Spain Tokyo, Japan Ulsan, South Korea East London, South Africa Mexico City, Mexico $20, 000 $18, 000 $22, 000 $16, 000 $10, 000 $12, 000 -1.5 $60, 000.00 $24, 000.00 $33, 000.00 $32, 000.00 $11, 428.60 $14, 400.00 -4.0 -3.0 -2.0 -8.0 -6.0arrow_forward
- Comcast has a cable monopoly. The following graph shows the demand, MR, and MC curve of Comcast. Use the graph to answer questions 3 to 8. Price (P) and Costs (in dollars per subscription) $25 $22 $21 $20 $19 0 5 6.5 MC 7 MR ATC Q (Number of subscriptions in millions per month)arrow_forwardAngie Mae has just finished recording her latest CD. Her record company's marketing department determines that the demand for the CD is as follows: Marginal Revenue Price Number of Total CDs Revenue 24 10,000 22 20,000 20 30,000 18 40,000 16 50,000 14 60,000 1. Find total revenue for a quantity equal to 10,000, 20,000, and so on (write your answers on the third column of the table above). What is the marginal revenue for each 10,000 increase in the quantity sold (write your answers on the fourth column of the table above)? 2. What quantity of CDs would maximize profit? 3. What would be the price be? 4. What would be the profit be? 5. If you were Angie Mae's agent, what recording fee would you advise her to demand from the record company? Why?arrow_forwardExplain whether the following sentence makes Good Economic Sense: “The way to tell if a business has monopoly power is to count the number of substitutes for that business’s product.”arrow_forward
- "Market power is the ability of sellers or buyers to affect the price of a good". Briefly discuss how monopoly power can be measured and factors that determine the amount of monopoly power an individual firm is likely to have? b. Consider the following demand and cost functions for a monopoly broadband television firm: P = 16 - 0.0006Q and TC = 100 000 + 0.0004Q2 where Q= the number of subscribers and P= the price of monthly service. What price and quantity would be expected if the firm is allowed to operate freely?arrow_forwardHow is Demand for an individual brand is more elastic than industry aggregate demand.arrow_forwardBlue INK is the only cabel service provider in Gazipur. The diagram below depicts the price, output and costs incurred by Blue INK. Use the graph to answer the following questions: 1. What is the Total revenue generated by Blue INK at the profit maximizing level of output? 2. If the Cable Service Market turns into a Perfectly Competitive Market, what will be the total ammount of the service provided? 3. If the market turns into a Monopoly market again, what will be the total deadweight loss created?arrow_forward
- Consider the local telephone company, a natural monopoly. The following graph shows the demand curve for phone services, the company's marginal revenue curve (labeled MR), its marginal cost curve (labeled MC), and its average total cost curve (labeled AC). (Hint: Click a point on the graph to see its exact coordinates.) PRICE (Dollars per month) 160 140 120 100 80 60 40 20 0 0 1 MR 2 3 4 567 QUANTITY (Thousands of households per month) AC MC D 8 (?)arrow_forwardThe figure to the right shows the market demand for electricity and the average total cost and marginal cost of producing electricity for a utility company. Suppose the utility company is a regulated natural monopoly. If government regulators want to achieve economic efficiency, then they will regulate a price of $ per kilowatt hour. (Enter a numeric response using a real number rounded to two decimal places) Now suppose instead that government regulators want to eat the lowest price such that the utility company will not suffer a loss so that it will continue to produce in the long run. If so, then i government regulators will set a price of $ per kilowatt hour. Price and cost (dollars per kilowatt hour) 0.52 048 044- 040- 0.36 0324 0.26 0.24 0.20 0.16 0.12 0.06 004 0.00+ ATC MC 4 8 12 16 20 24 28 32 36 40 44 48 Quantity of kilowatt hours (in billions)arrow_forwardDiscuss the basic differences between a competitive and a monopoly market. Which market has higher elastic demand in the long run and why?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education