A company is considering building a bridge across a river. The bridge would cost $350,000 to build and nothing to maintain. The following table shows the company's anticipated demand over the lifetime of the bridge: Price Quantity (Dollars per crossing) (Thousands of crossings) 4.00 0 3.50 40 3.00 80 2.50 120 2.00 160 1.50 200 1.00 240 0.50 280 0 320 If the company were to build the bridge, its profit-maximizing price would be , and itwould not produce the efficient level of output. If the company is interested in maximizing profit, itshould not build the bridge because profit would be . (Note: If the company incurs a loss, be sure to enter a negative number for profit.) If the government were to build the bridge, it should charge a price of . True or False: The government should build the bridge.
A company is considering building a bridge across a river. The bridge would cost $350,000 to build and nothing to maintain. The following table shows the company's anticipated demand over the lifetime of the bridge: Price Quantity (Dollars per crossing) (Thousands of crossings) 4.00 0 3.50 40 3.00 80 2.50 120 2.00 160 1.50 200 1.00 240 0.50 280 0 320 If the company were to build the bridge, its profit-maximizing price would be , and itwould not produce the efficient level of output. If the company is interested in maximizing profit, itshould not build the bridge because profit would be . (Note: If the company incurs a loss, be sure to enter a negative number for profit.) If the government were to build the bridge, it should charge a price of . True or False: The government should build the bridge.
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter6: Simple Pricing
Section: Chapter Questions
Problem 9MC
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1 . Problems and Applications Q4
A company is considering building a bridge across a river. The bridge would cost $350,000 to build and nothing to maintain. The following table shows the company's anticipated demand over the lifetime of the bridge:
|
Quantity
|
---|---|
(Dollars per crossing)
|
(Thousands of crossings)
|
4.00 | 0 |
3.50 | 40 |
3.00 | 80 |
2.50 | 120 |
2.00 | 160 |
1.50 | 200 |
1.00 | 240 |
0.50 | 280 |
0 | 320 |
If the company were to build the bridge, its profit-maximizing price would be
, and itwould not produce the efficient level of output.
If the company is interested in maximizing profit, itshould not build the bridge because profit would be
. (Note: If the company incurs a loss, be sure to enter a negative number for profit.)
If the government were to build the bridge, it should charge a price of
.
True or False: The government should build the bridge.
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