EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Question
Chapter 8, Problem 8.2P
A
To determine
Find out the effect in the lawn mowing work of the individual for the proposed $100 fee of lawn mowing, and also the profits.
B
To determine
Find out the effect on profit maximizing decision of the individual supposing that the 50% of the weekly profits are taken as the mowing charges.
C
To determine
Find out the effect on the marginal cost function, on the profit maximizing decision, and the profits, and also the income that the father of the individual will get.
D
To determine
Supposing the given condition, find out the effect on the profit maximizing decision of the individual, and explain why the results are same in these parts.
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QUESTION 10
Mary is the only one in town who can make red velvet cupcakes. Each cupcake costs her $4 to make (i.e. her marginal cost is constant
at $4 per cupcake). Currently, Mary charges $4.50 for a cupcake. Below is the table of potential prices she could charge and the
corresponding quantities.
Price
($/cupcake)
6.50
6.00
5.50
5.00
4.50
4.00
Quantity
(cupcakes)
30
42
56
72
92
105
Answer the following questions:
a. What is Mary's marginal revenue when the price is $4.50 per cupcake? Answer to the nearest two decimal places. $
per cupcake.
b. At a price of $4.50 per cupcake, should Mary decrease or increase the number of cupcakes sold to maximise profit?
Type D for Decrease or I for Increase.
c. Calculate Mary's profit-maximising quantity of cupcakes to sell. Answer to the nearest whole number (with no decimal places).
cupcakes.
Nick is planning on starting a mobile pizza oven. He is expecting his customers to spend $20 per pizza. It is estimated that the costs associated with the ingredients will be $5 per pizza. In addition, his fixed costs for renting the mobile oven is $150 per day.
1) How many pizzas does Nick need to sell to break-even per day?
2) If Nick wants to make a profit of $300 and sell 25 pizzas per day, calculate the price he should charge per pizza.
3) If Nick increases the price per pizza to the amount found in part (b) then explain the effect on the break-even number of pizzas sold. Assume the fixed costs and the variable costs remain unchanged. Do not re-calculate the break-even quantity, x, for this question however you may quote the break-even formula and contribution margin to aid your explanation.
Suppose that managers at Honda are deciding how to price the new Honda Accord. The managers estimate that their total costs
increase by $20,000 for each car they produce. They also estimate the demand curve they face; it is described by the equation:
Q = -0.4 P + 16,000,
where Q represents the quantity of Honda Accords they will sell and P represents the price they charge in US dollars.
We can re-write that demand curve as:
P = 40,000 - 2.5 Q.
Take every possibly quantity that the managers might choose between
and 7,000 in units of 100. For each possible quantity,
calculate the associated price the managers would need to charge, the revenue they would earn, and the total costs. You can then
calculate profits for each level of quantity. Highlight the cell that contains the highest value of profit.
Finally, you can also approximate marginal revenue here as the change in total revenue after the next 100 cars are produced. At what
quantity does marginal revenue roughly equal marginal cost?…
Chapter 8 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 8.3 - Prob. 1MQCh. 8.3 - Prob. 2MQCh. 8.3 - Prob. 1.1MQCh. 8.3 - Prob. 2.1MQCh. 8.4 - Prob. 1TTACh. 8.4 - Prob. 2TTACh. 8.4 - Prob. 1MQCh. 8.4 - Prob. 2MQCh. 8.5 - Prob. 1TTACh. 8.5 - Prob. 2TTA
Ch. 8.5 - Prob. 1.1TTACh. 8.5 - Prob. 2.1TTACh. 8.5 - Prob. 1MQCh. 8.5 - Prob. 2MQCh. 8 - Prob. 1RQCh. 8 - Prob. 2RQCh. 8 - Prob. 3RQCh. 8 - Prob. 4RQCh. 8 - Prob. 5RQCh. 8 - Prob. 6RQCh. 8 - Prob. 7RQCh. 8 - Prob. 8RQCh. 8 - Prob. 9RQCh. 8 - Prob. 10RQCh. 8 - Prob. 8.1PCh. 8 - Prob. 8.2PCh. 8 - Prob. 8.3PCh. 8 - Prob. 8.4PCh. 8 - Prob. 8.5PCh. 8 - Prob. 8.6PCh. 8 - Prob. 8.7PCh. 8 - Prob. 8.8PCh. 8 - Prob. 8.9PCh. 8 - Prob. 8.10P
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