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Total cost Price (dollars per ticket) Quantity (tickets (dollars per show) per show) 20 0 1,000 Big Top is the only circus in the nation. The table sets out the demand schedule for circus tickets and the cost schedule for producing the circus. Calculate Big Top's profit-maximizing price, output, and economic profit if it charges a single price for all tickets. a. 18 100 1,600 16 200 2,200 14 300 2,800 12 400 3,400 10 500 4,000 8 600 4,600 6 700 5,200 Big Top's total revenue and marginal revenue schedules are in the second table (see above table), which is useful to answer these questions. Big Top's marginal cost is constant and equal to $6 per ticket. Big Top's marginal revenue equals its marginal cost when the quantity of tickets is 350 tickets per show and the price is $13 per ticket. The total revenue is 350 tickets $13, which is $4,550. The total cost of 350 tickets is $3,100. So the economic profit equals $4,550 - $3,100, which is $1,450. You are constructing a table with total costs, average total costs, and total 4 800 5,800 revenue. b. When Big Top maximizes profit, what is the consumer surplus and producer surplus and is the circus efficient? Explain why or why not. You are constructing a table showing total revenue and marginal revenue. You are also constructing a graph to show consumer surplus and producer surplus C. At the market equilibrium, no children under 10 years old attend the circus. Big Top offers children under 10 a discount of 50 percent. How will this discount change the consumer surplus and producer surplus? Will Big Top be more efficient by offering the discount to children? No graph is needed just an explanation.

Total cost Price (dollars per ticket) Quantity (tickets (dollars per show) per show) 20 0 1,000 Big Top is the only circus in the nation. The table sets out the demand schedule for circus tickets and the cost schedule for producing the circus. Calculate Big Top's profit-maximizing price, output, and economic profit if it charges a single price for all tickets. a. 18 100 1,600 16 200 2,200 14 300 2,800 12 400 3,400 10 500 4,000 8 600 4,600 6 700 5,200 Big Top's total revenue and marginal revenue schedules are in the second table (see above table), which is useful to answer these questions. Big Top's marginal cost is constant and equal to $6 per ticket. Big Top's marginal revenue equals its marginal cost when the quantity of tickets is 350 tickets per show and the price is $13 per ticket. The total revenue is 350 tickets $13, which is $4,550. The total cost of 350 tickets is $3,100. So the economic profit equals $4,550 - $3,100, which is $1,450. You are constructing a table with total costs, average total costs, and total 4 800 5,800 revenue. b. When Big Top maximizes profit, what is the consumer surplus and producer surplus and is the circus efficient? Explain why or why not. You are constructing a table showing total revenue and marginal revenue. You are also constructing a graph to show consumer surplus and producer surplus C. At the market equilibrium, no children under 10 years old attend the circus. Big Top offers children under 10 a discount of 50 percent. How will this discount change the consumer surplus and producer surplus? Will Big Top be more efficient by offering the discount to children? No graph is needed just an explanation.

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter8: Perfect Competition
Section: Chapter Questions
Problem 39P: The AAA Aquarium Co. sells aquariums for 20 each. Fixed costs of production are 20. The total...
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Marginal Cost is equal to Marginal Revenue when Price= $13 and Quantity= 350, which is the profit-maximizing price. 
Price (dollars ticket) 20 Quantity Total cost (dollars per Big Top is the only circus in the nation. The table sets out the demand schedule for circus tickets and the cost schedule for producing the circus. (tickets per show) show) 0 1,000 a. 18 100 1,600 Calculate Big Top's profit-maximizing price, output, and economic profit if it charges a single price for all tickets. 16 200 2,200 14 300 2,800 12 400 3,400 10 500 4,000 8 600 4,600 6 700 5,200 Big Top's total revenue and marginal revenue schedules are in the second table (see above table), which is useful to answer these questions. Big Top's marginal cost is constant and equal to $6 per ticket. Big Top's marginal revenue equals its marginal cost when the quantity of tickets is 350 tickets per show and the price is $13 per ticket. The total revenue is 350 tickets x $13, which is $4,550. The total cost of 350 tickets is $3,100. So the economic profit equals $4,550 - $3,100, which is $1, 450. You are constructing a table with total costs, average total costs, and total 4 800 5,800 0 revenue. b. When Big Top maximizes profit, what is the consumer surplus and producer surplus and is the circus efficient? Explain why or why not. You are constructing a table showing total revenue and marginal revenue. You are also constructing a graph to show consumer surplus and producer surplus C. At the market equilibrium, no children under 10 years old attend the circus. Big Top offers children under 10 a discount of 50 percent. How will this discount change the consumer surplus and producer surplus? Will Big Top be more efficient by offering the discount to children? No graph is needed just an explanation. d. If Big Top is regulated to produce the efficient output, what is the quantity of tickets sold, what is the price of a ticket, and what would be the consumer surplus? No graph is needed, just an explanation with a calculation of consumer surplus e. If Big Top is regulated to charge a price equal to average total cost, what is the quantity of tickets sold, the price of a ticket, and economic profit? You need a graph showing price, MC and AC. You need a graph and you have to show deadweight loss per
Transcribed Image Text:Price (dollars ticket) 20 Quantity Total cost (dollars per Big Top is the only circus in the nation. The table sets out the demand schedule for circus tickets and the cost schedule for producing the circus. (tickets per show) show) 0 1,000 a. 18 100 1,600 Calculate Big Top's profit-maximizing price, output, and economic profit if it charges a single price for all tickets. 16 200 2,200 14 300 2,800 12 400 3,400 10 500 4,000 8 600 4,600 6 700 5,200 Big Top's total revenue and marginal revenue schedules are in the second table (see above table), which is useful to answer these questions. Big Top's marginal cost is constant and equal to $6 per ticket. Big Top's marginal revenue equals its marginal cost when the quantity of tickets is 350 tickets per show and the price is $13 per ticket. The total revenue is 350 tickets x $13, which is $4,550. The total cost of 350 tickets is $3,100. So the economic profit equals $4,550 - $3,100, which is $1, 450. You are constructing a table with total costs, average total costs, and total 4 800 5,800 0 revenue. b. When Big Top maximizes profit, what is the consumer surplus and producer surplus and is the circus efficient? Explain why or why not. You are constructing a table showing total revenue and marginal revenue. You are also constructing a graph to show consumer surplus and producer surplus C. At the market equilibrium, no children under 10 years old attend the circus. Big Top offers children under 10 a discount of 50 percent. How will this discount change the consumer surplus and producer surplus? Will Big Top be more efficient by offering the discount to children? No graph is needed just an explanation. d. If Big Top is regulated to produce the efficient output, what is the quantity of tickets sold, what is the price of a ticket, and what would be the consumer surplus? No graph is needed, just an explanation with a calculation of consumer surplus e. If Big Top is regulated to charge a price equal to average total cost, what is the quantity of tickets sold, the price of a ticket, and economic profit? You need a graph showing price, MC and AC. You need a graph and you have to show deadweight loss per
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Price (dollars ticket) 20 Quantity Total cost (dollars per Big Top is the only circus in the nation. The table sets out the demand schedule for circus tickets and the cost schedule for producing the circus. (tickets per show) show) 0 1,000 a. 18 100 1,600 Calculate Big Top's profit-maximizing price, output, and economic profit if it charges a single price for all tickets. 16 200 2,200 14 300 2,800 12 400 3,400 10 500 4,000 8 600 4,600 6 700 5,200 Big Top's total revenue and marginal revenue schedules are in the second table (see above table), which is useful to answer these questions. Big Top's marginal cost is constant and equal to $6 per ticket. Big Top's marginal revenue equals its marginal cost when the quantity of tickets is 350 tickets per show and the price is $13 per ticket. The total revenue is 350 tickets x $13, which is $4,550. The total cost of 350 tickets is $3,100. So the economic profit equals $4,550 - $3,100, which is $1, 450. You are constructing a table with total costs, average total costs, and total 4 800 5,800 0 revenue. b. When Big Top maximizes profit, what is the consumer surplus and producer surplus and is the circus efficient? Explain why or why not. You are constructing a table showing total revenue and marginal revenue. You are also constructing a graph to show consumer surplus and producer surplus C. At the market equilibrium, no children under 10 years old attend the circus. Big Top offers children under 10 a discount of 50 percent. How will this discount change the consumer surplus and producer surplus? Will Big Top be more efficient by offering the discount to children? No graph is needed just an explanation. d. If Big Top is regulated to produce the efficient output, what is the quantity of tickets sold, what is the price of a ticket, and what would be the consumer surplus? No graph is needed, just an explanation with a calculation of consumer surplus e. If Big Top is regulated to charge a price equal to average total cost, what is the quantity of tickets sold, the price of a ticket, and economic profit? You need a graph showing price, MC and AC. You need a graph and you have to show deadweight loss per
Transcribed Image Text:Price (dollars ticket) 20 Quantity Total cost (dollars per Big Top is the only circus in the nation. The table sets out the demand schedule for circus tickets and the cost schedule for producing the circus. (tickets per show) show) 0 1,000 a. 18 100 1,600 Calculate Big Top's profit-maximizing price, output, and economic profit if it charges a single price for all tickets. 16 200 2,200 14 300 2,800 12 400 3,400 10 500 4,000 8 600 4,600 6 700 5,200 Big Top's total revenue and marginal revenue schedules are in the second table (see above table), which is useful to answer these questions. Big Top's marginal cost is constant and equal to $6 per ticket. Big Top's marginal revenue equals its marginal cost when the quantity of tickets is 350 tickets per show and the price is $13 per ticket. The total revenue is 350 tickets x $13, which is $4,550. The total cost of 350 tickets is $3,100. So the economic profit equals $4,550 - $3,100, which is $1, 450. You are constructing a table with total costs, average total costs, and total 4 800 5,800 0 revenue. b. When Big Top maximizes profit, what is the consumer surplus and producer surplus and is the circus efficient? Explain why or why not. You are constructing a table showing total revenue and marginal revenue. You are also constructing a graph to show consumer surplus and producer surplus C. At the market equilibrium, no children under 10 years old attend the circus. Big Top offers children under 10 a discount of 50 percent. How will this discount change the consumer surplus and producer surplus? Will Big Top be more efficient by offering the discount to children? No graph is needed just an explanation. d. If Big Top is regulated to produce the efficient output, what is the quantity of tickets sold, what is the price of a ticket, and what would be the consumer surplus? No graph is needed, just an explanation with a calculation of consumer surplus e. If Big Top is regulated to charge a price equal to average total cost, what is the quantity of tickets sold, the price of a ticket, and economic profit? You need a graph showing price, MC and AC. You need a graph and you have to show deadweight loss per
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