Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 17, Problem 1PA
Subpart (a):
To determine
Equilibrium price .
Subpart (b):
To determine
Calculation of marginal revenue.
Sub part (c):
To determine
Calculation of profit.
Subpart (d):
To determine
What would be the price and quantity of diamond in Russia and South Africa after formation of cartel.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
A large share of the world supply of diamonds comes from Russia and South Africa. Suppose that the marginal cost of mining diamonds is constant at $1,000 per diamond, and the demand for diamonds is described by the following schedule:
Price
Quantity
(Dollars)
(Diamonds)
8,000
5,000
7,000
6,000
6,000
7,000
5,000
8,000
4,000
9,000
3,000
10,000
2,000
11,000
1,000
12,000
If there were many suppliers of diamonds, the price would be___per diamond and the quantity sold would be___diamonds.
If there were only one supplier of diamonds, the price would be___per diamond and the quantity sold would be___diamonds.
Suppose Russia and South Africa form a cartel.
In this case, the price would be___per diamond and the total quantity sold would be___diamonds. If the countries split the market evenly, South Africa would produce___diamonds and earn a profit of___.
If South Africa increased its production by 1,000 diamonds while Russia stuck to the cartel…
A company manufactures Products A, B, and C. Each product is processed in three departments: I, II, and III. The total available labor-hours per week for Departments I, II, and III are 1020, 1080, and 900, respectively. The time requirements (in hours per unit) and the profit per unit for each product are as follows.
Product A
Product B
Product C
Dept. I
2
1
2
Dept. II
3
1
2
Dept. II
2
2
1
Profit
$18
$12
$15
If management decides that the number of units of Product B manufactured must equal or exceed the number of units of products A and C manufactured, how many units of each product should the company produce to maximize its profit?
A large share of the world supply of diamonds comes from Russia and South Africa. Suppose that the marginal cost of mining diamonds is constant at
$3,000 per diamond, and the demand for diamonds is described by the following schedule:
Price
Quantity
(Dollars)
(Diamonds)
8,000
3,000
7,000
4,000
6,000
5,000
5,000
6,000
4,000
7,000
3,000
8,000
2,000
9,000
1,000
10,000
If there were many suppliers of diamonds, the price would be $
per diamond and the quantity sold would be
diamonds.
If there were only one supplier of diamonds, the price would be $
per diamond and the quantity sold would be
diamonds.
Suppose Russia and South Africa form a cartel.
per diamond and the total quantity sold would be
diamonds and earn a profit of $
In this case, the price would be $
diamonds. If the countries split the market
evenly, South Africa would produce
Chapter 17 Solutions
Principles of Microeconomics (MindTap Course List)
Ch. 17.1 - Prob. 1QQCh. 17.2 - Prob. 2QQCh. 17.3 - Prob. 3QQCh. 17 - Prob. 1CQQCh. 17 - Prob. 2CQQCh. 17 - Prob. 3CQQCh. 17 - Prob. 4CQQCh. 17 - Prob. 5CQQCh. 17 - Prob. 6CQQCh. 17 - Prob. 1QR
Ch. 17 - Prob. 2QRCh. 17 - Prob. 3QRCh. 17 - Prob. 4QRCh. 17 - Prob. 5QRCh. 17 - Prob. 6QRCh. 17 - Prob. 7QRCh. 17 - Prob. 1PACh. 17 - Prob. 2PACh. 17 - Prob. 3PACh. 17 - Prob. 4PACh. 17 - Prob. 5PACh. 17 - Prob. 6PACh. 17 - A case study in the chapter describes a phone...Ch. 17 - Prob. 8PACh. 17 - Prob. 9PA
Knowledge Booster
Similar questions
- A large share of the world supply of diamonds comes from Russia and South Africa. Suppose that the marginal cost of mining diamonds is constant at $2,000 per diamond, and the demand for diamonds is described by the following schedule: Price Quantity (Dollars) (Diamonds) 8,000 2,000 7,000 3,000 6,000 4,000 5,000 5,000 4,000 6,000 3.000 7,000 2,000 8,000 1,000 9,000 If there were many suppliers of diamonds, the price would be S per diamond and the quantity sold would be diamonds. If there were only one supplier of diamonds, the price would bes per diamond and the quantity sold would be diamonds. Suppose Russia and South Africa form a cartel. In this case, the price would be S per diamond and the total quantity sold would be diamonds. If the countries split the market evenly, South Africa would produce diamonds and earn a profit of $ If South Africa increased its production by 1,000 diamonds while Russia stuck to the cartel agreement, South Africa's profit would to Why are cartel…arrow_forwardA large share of the world supply of diamonds comes from Russia and South Africa. Suppose that the marginal cost of mining diamonds is constant at $3,000 per diamond, and the demand for diamonds is described by the following schedule: Price Quantity (Dollars) (Diamonds) 8,000 3,000 7,000 4,000 6,000 5,000 5,000 6,000 4,000 7,000 3,000 8,000 2,000 9,000 1,000 10,000 If there were many suppliers of diamonds, the price would be______ per diamond and the quantity sold would be _______ diamonds. If there were only one supplier of diamonds, the price would be ______ per diamond and the quantity sold would be ______ diamonds. Suppose Russia and South Africa form a cartel. In this case, the price would be _____ per diamond and the total quantity sold would be _____ diamonds. If the countries split the market evenly, South Africa would produce _____ diamonds and earn a profit of _____ . If South Africa increased its production by 1,000 diamonds…arrow_forwardCountry Motorbikes Incorporated finds that it costs $400 to produce each motorbike, and that fixed costs are $1300 per day. The price function is p(x)= 700-5x, where p the price (in dollars) at which exactly x motorbikes will be sold. Find the quantity Country Motorbikes should produce and the price it should charge to maximize profit. Also find the maximum profit. 40 quantity price profit motorbikes Enter a number.arrow_forward
- Each ton of ore mined from the ABC Mine produces 1 ounce of silver and 1 pound of lead. Marginal costs are $10 per ton of ore mined. The demand for silver is P_S = 11 – 0.00003Q_S and the demand for lead is P_L=0.4 – 0.000005Q_L where Q_S is ounces of silver and Q_L is pounds of lead. Calculate profit-maximizing sales quantities and prices for silver and lead. (hint: apply the marginal principle to aggregated revenues)arrow_forwardDemand for an item is constant at 40 units a week, and the economic order quantity is calculated to be 100 units. What is the reorder level if lead time is constant at 4 weeks? What is the effect of adding some margin of safety and raising the reorder level by ten units? What happens if the lead time (a) falls to 2 weeks or (b) rises to 6 weeks?arrow_forwardGiven Question #1 Cost function C= 3000+6Q Q = 4400 - 200Q - This is the demand function Q= 1600 P = 14 Profit= 22400-12600 = 9800 Question #2 Q=$480 Q=$1120 Question #3 Ed=−1.25 Ed=−0.55 0.5<0.8− markup index it is charging less. 0.64<-1/-0.55--markup index it is charging less. Please answer question #5 A-C 5. Optimal price in San Antonio You decide to charge different prices in the two locations. To do this, you decide to use the demand functions you estimated in Q2 to calculate separate optimal prices in the two locations. For your costs in San Antonio, you have fixed costs of $2000 per week. In addition, it costs you six dollars per burger in variable costs (ingredients, labor etc.) A. What is your cost function in San Antonio? B. Using the demand function from Q2, calculate the profit maximizing price and quantity. Is the new price higher or lower than the price if you do not price discriminate? Is this consistent with your answer from Q3? C. What are your…arrow_forward
- A major software developer has estimated the demand for its new personal finance software package to be Q=1,000,000P-2 while the total cost of the package is C = 10,000+ 25Q. If this firm wishes to maximize profit, what percentage markup should it place on this product where percentage markup is defined as 100*(sale price - marginal cost)/marginal cost? 4. a. b. C. d. e. ANS: 90% 100% 20% 40% 250%arrow_forwardSampson Ltd produces two products that can be produced on either of two machines. Each month, only 5o0 hours of time are available on each machine. The time required to produce each item by hour and machine is: Machine Machine Product 1 Product 2 3 4 Month Month 1 Month 2 Month 1 Demand Demand Price Price Product 1 100 160 $45 $65 $10 Product 2 120 110 $35 The demand and price point for each product that customers are willing to pay are above. The company goal is to maximize revenue from sales from the next two months. Based on the provided information, how many constraints does this problem have excluding the non-negativity constraints?arrow_forwardQuestion Road Runner Co is a Pakistani manufacturer making Bicycles. It exports to two markets,Bangladesh and Sri Lanka. Demand for Bicycles in thesetwo markets is given by the following Functions: Bangladesh Q1 = 12 – P1 Sri Lanka Q2 = 8 – P2 Where Q1 and Q2 are respective quantities sold (in thousands) andP1 and P2 are the respective prices (in Pak. Rupees per unit) in the two markets. Total cost function is C = 5 + 2 (Q1+ Q2) Now consider two cases (i) Company is effectively able to price discriminate in the two markets. What will be the total profits? (ii) Suppose the company does not engage in price discrimination. By charging the same price in the two markets what are the profit maximizing levels of price, output, and the total profits? c. Analyze, with graphs, the two alternative pricing strategies…arrow_forward
- Road Runner Co is a Pakistani manufacturer making Bicycles. It exports to two markets,Bangladesh and Sri Lanka. Demand for Bicycles in thesetwo markets is given by the following Functions: Bangladesh Q1 = 12 – P1 Sri Lanka Q2 = 8 – P2 Where Q1 and Q2 are respective quantities sold (in thousands) andP1 and P2 are the respective prices (in Pak. Rupees per unit) in the two markets. Total cost function is C = 5 + 2 (Q1+ Q2) b. consider two cases: (i) Company is effectively able to price discriminate in thetwo markets. What will be the total profits? (ii) Suppose the company does not engage in price discrimination. By charging thesameprice in the two markets what are the profit maximizing levels of price,output, and the total profits? c. Analyze, with graphs, the two alternative pricing strategies available to the company.arrow_forwardRoad Runner Co is a Pakistani manufacturer making Bicycles. It exports to two markets,Bangladesh and Sri Lanka. Demand for Bicycles in thesetwo markets is given by the following Functions: Bangladesh Q1 = 12 – P1 Sri Lanka Q2 = 8 – P2 Where Q1 and Q2 are respective quantities sold (in thousands) andP1 and P2 are the respective prices (in Pak. Rupees per unit) in the two markets. Total cost function is C = 5 + 2 (Q1+ Q2) A.Determine the company’s total profit function. Also, (i) What are the profit maximizing levels of price and output for the two markets? (ii) Calculate the marginal revenues in each market. B.Now consider two cases: (i) Company is effectively able to price discriminate in thetwo markets. What will be the total profits? (ii) Suppose the company does not engage in price discrimination. By charging thesameprice in the two markets what are the profit maximizing levels of price,output, and the total profits?…arrow_forwardRoad Runner Co is a Pakistani manufacturer making Bicycles. It exports to two markets,Bangladesh and Sri Lanka. Demand for Bicycles in thesetwo markets is given by the following Functions: Bangladesh Q1 = 12 – P1 Sri Lanka Q2 = 8 – P2 Where Q1 and Q2 are respective quantities sold (in thousands) andP1 and P2 are the respective prices (in Pak. Rupees per unit) in the two markets. Total cost function is C = 5 + 2 (Q1+ Q2) (i) Company is effectively able to price discriminate in the two markets. What will be the total profits? (ii) Suppose the company does not engage in price discrimination. By charging the same price in the two markets what are the profit maximizing levels of price, output, and the total profits? (iii) Analyze, with graphs, the two alternative pricing strategies available to the company.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:PEARSON
Engineering 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 Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial 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