3. Suppose that you operate a parking lot in downtown Milwaukee. Your cost for allowing another vehicle to park in your lot is virtually zero – therefore, the only thing you care about is getting as much revenue as you possibly can. Price per hour A $6 5. 4 E 2 1 400 500 600 Hours per day 100 200 300 a. Suppose that you raise the price of parking from $3 to $4. Draw the price effect and the quantity effect on the graph. b. Calculate the price effect and the quantity effect (note that the sign of each effect is important)! c. Is your demand curve elastic, inelastic, or unit elastic between $3 and $4? Given that you want to raise as much revenue as possible, do you want to raise the price from $3 to $4? 3.
3. Suppose that you operate a parking lot in downtown Milwaukee. Your cost for allowing another vehicle to park in your lot is virtually zero – therefore, the only thing you care about is getting as much revenue as you possibly can. Price per hour A $6 5. 4 E 2 1 400 500 600 Hours per day 100 200 300 a. Suppose that you raise the price of parking from $3 to $4. Draw the price effect and the quantity effect on the graph. b. Calculate the price effect and the quantity effect (note that the sign of each effect is important)! c. Is your demand curve elastic, inelastic, or unit elastic between $3 and $4? Given that you want to raise as much revenue as possible, do you want to raise the price from $3 to $4? 3.
Chapter13: Monopoly And Antitrust
Section: Chapter Questions
Problem 13P
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