Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Question
Chapter 16, Problem 10SPPA
To determine
To illustrate:
The U.S. Postal Service's price, quantity produced,
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6-10F Fill in the blanks in the figure below:
a.
c.
b.
C.
d.
Price and marginal revenue (in dollars)
Total revenue in dolla
80
P
48
4
12,800
8
16
18
19,200
T
TR
PMR
g
h.
200
1.
200
Quantity
Demand
-1
1,000
Marginal Revenue
Total Revenue
1.000
Ⓒ Macmillan Learning
The accompanying graph depicts a hypothetical monopoly. Follow instuctions 1-3 below to identify the monopoly's profits.
1. Place point E at the monopoly's profit maximizing price and quantity.
2. Move the average total cost (ATC) curve to a position that depicts the monopoly earning a positive profit.
3. Place the area labeled Profit in the area of the graph that represents the monopoly's profit.
Price ($ per unit)
10
9
8
7
5
3
2
1
0
0
1
O
X
E
MR
2 3
4
5
6
Quantity (millions of units)
7
MC
00
D
9
ATC
10
Profit
The table below depicts the revenue for the only restaurant in a small rural town. It costs the restaurant $6.50 to prepare each meal. Use the table to answer questions.
Quantity
Price
Total Revenue
Marginal Revenue
Total Costs
Marginal Costs
Economic Profit/Loss
0
$8.00
1
$7.50
2
$7.00
3
$6.50
4
$6.00
5
$5.50
What price should the restaurant charge if it wants to maximize the total economic surplus? (i.e. What level of output would achieve allocative efficiency? At this level of output what is the economic profit for the restaurant?
Chapter 16 Solutions
Foundations of Economics (8th Edition)
Ch. 16 - Prob. 1SPPACh. 16 - Prob. 2SPPACh. 16 - Prob. 3SPPACh. 16 - Prob. 4SPPACh. 16 - Prob. 5SPPACh. 16 - Prob. 6SPPACh. 16 - Prob. 7SPPACh. 16 - Prob. 8SPPACh. 16 - Prob. 9SPPACh. 16 - Prob. 10SPPA
Ch. 16 - Prob. 11SPPACh. 16 - Prob. 1IAPACh. 16 - Prob. 2IAPACh. 16 - Prob. 3IAPACh. 16 - Prob. 4IAPACh. 16 - Prob. 5IAPACh. 16 - Prob. 6IAPACh. 16 - Prob. 7IAPACh. 16 - Prob. 8IAPACh. 16 - Prob. 9IAPACh. 16 - Prob. 10IAPACh. 16 - Prob. 1MCQCh. 16 - Prob. 2MCQCh. 16 - Prob. 3MCQCh. 16 - Prob. 4MCQCh. 16 - Prob. 5MCQCh. 16 - Prob. 6MCQCh. 16 - Prob. 7MCQ
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