3. The components of marginal revenue Darnell's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Darnell produced eight fire engines, but he has decided to increase production to nine fire engines. The following graph shows the demand curve Darnell faces. As you can see, to sell the additional engine, Darnell must lower his price from $80,000 to $40,000 per fire engine. Note that while Darnell gains revenue from the additional engine he sells, he also loses revenue from the initial eight engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial eight engines by selling at $40,000 rather than $80,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $40,000. PRICE (Thousands of dollars per fire engine) 200 180 160 140 120 100 80 60 40 20 0 0 1 + 2 3 4 5 6 QUANTITY (Fire engines) 7 +*+ 8 Demand + 9 10 Revenue Lost Revenue Gained ?

3. The components of marginal revenue Darnell's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Darnell produced eight fire engines, but he has decided to increase production to nine fire engines. The following graph shows the demand curve Darnell faces. As you can see, to sell the additional engine, Darnell must lower his price from $80,000 to $40,000 per fire engine. Note that while Darnell gains revenue from the additional engine he sells, he also loses revenue from the initial eight engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial eight engines by selling at $40,000 rather than $80,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $40,000. PRICE (Thousands of dollars per fire engine) 200 180 160 140 120 100 80 60 40 20 0 0 1 + 2 3 4 5 6 QUANTITY (Fire engines) 7 +*+ 8 Demand + 9 10 Revenue Lost Revenue Gained ?

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter15: Monopoly

Section: Chapter Questions

Problem 8PA

See similar textbooks

Similar questions

Explain in words why a profit-maximizing film will not choose to produce at a quantity where marginal cost exceeds marginal revenue.
3. The components of marginal revenueJabari's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Jabari initially produced eight trucks, but then decided to increase production to nine trucks. The following graph gives the demand curve faced by Jabari’s HookNLadder. As the graph shows, in order to sell the additional fire truck, Jabari must lower the price from $80,000 to $60,000 per truck. Notice that Jabari gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial eight engines because they are all sold at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial eight engines by selling at $60,000 rather than $80,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $60,000. 3. The components of marginal revenue Jabari's HookNLadder…
2. You are the Southeastern Michigan regional manager at Coca-Cola, responsible forproduction and pricing in the Metro Detroit area. Your primary competitor is Pepsi. The marketresearch team at Coca-Cola is thinking about launching a new product, Orange Vanilla Coke, toboost the brand. The cost function to produce a 12-pack of 12 fl. oz. cans of Orange VanillaCoke is C(qcoke) = 0.25qcoke and the market research team has estimated inverse market demandfor a 12-pack of this new “pop” in Southeastern Michigan to be P = 10.25 – 0.00025Q. a. Assuming Pepsi decides not to produce a similar product, allowing Coca-Cola to maintainmonopoly power in the market for orange vanilla cola, what price and quantity will youchoose to maximize profit? How much profit does Coca-Cola earn?b. What price and quantity you would choose to maximize profit if Pepsi spies discover yourproduct before launch, allowing Pepsi to produce and launch an identical product at the sametime. For your answer, assume the cost…
Igor’s Christmas tree lot has a monopoly on sales of Christmas trees. To increase his sales from 100 trees to 101 trees, he must drop the price of all his trees from $28 to $27. What is Igor’s marginal revenue when he lowers his price and increases his sales from 100 to 101 trees?
15. A hotel rents rooms to customers by the night. The hotel determines that if it sets the price of the room to be $140 per night, 140 rooms will be rented. In order to rent 190 rooms, it must lower the price to $90 per night. If the hotel sets the price to be $110 per night, what is the marginal revenue? The marginal revenue is $enter your response here per room.
2. The gains and loss from selling one more unit Sean's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Sean produced seven fire engines, but he has decided to increase production to eight fire engines. The following graph shows the demand curve Sean faces. As you can see, to sell the additional engine, Sean must lower his price from $100,000 to $50,000 per fire engine. Note that although Sean gains revenue from the additional engine he sells, he also loses revenue from the initial seven engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial seven engines by selling at $50,000 rather than $100,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $50,000.
The table below contains some revenue and cost data for the Rising Moon T-shirt Company (quantities for packets of a dozen shirts), which is in long-term equilibrium.a. Complete the blanks in the following table. Round your answers in the "AC" column to 2 decimal places. Quantity Price TR MR TC MC AC 0 / $ / / $128 / / 1 70 160 2 136 190 3 198 230 4 256 272 5 310 315 6 360 360 7 406 406 8 448 453 b. What is the profit-maximizing price and output for Rising Moon? Price: $ Output: c. At the profit-maximizing output, what are MC and MR? MC: $ MR: $ d. At the profit-maximizing output, what are AC and AR? Round your AC answer to 2 decimal places. AC: $ AR: $ e. Given your answers above, what type of market must Rising Moon be operating in?
Suppose the following data represent the market demand for catfish: Price (per unit) $20 19 18 17 16 15 14 13 12 11Quantity demanded (units per day) 12 13 14 15 16 17 18 19 20 21Total revenue — — — — — — — — — —Marginal revenue — — — — — — — — — —Compute total and marginal revenue to complete the table above. At what rate of output is total revenue maximized? At what rate of output is MR less than price? At what rate of output does MR first become negative? Graph the demand and MR curves.
How do I get the price elasticity number?? and how do I graph it? P Q Price Total Elasticity Revenue $9.00 1 - 9 $8.00 2 16 $7.00 3 21 $6.00 4 24 $5.00 5 25 $4.00 6 24 $3.00 7 21 $2.00 8 16