TNBest is the only electricity company in a suburban area. Suppose that the demand for electricity for this area is ? = 500 − 10? and the cost of producing electricity is ?? = 500 + 2?. (i) If the city council want to make sure that there is no deadweight loss in this market, what price will they force TNBest to charge? What will output be in that case? Calculate consumer surplus and TNBest’s profit with that price.
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TNBest is the only electricity company in a suburban area. Suppose that the
demand for electricity for this area is ? = 500 − 10? and the cost of producing electricity is ?? = 500 + 2?.
(i) If the city council want to make sure that there is no
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- Suppose that there is only one zoo in city A. The demand schedule faced by the zoo is P = 2350 − 70Q where P is price per zoo ticket in dollars and Q is the number of zoo tickets per day, and Q can take integer values only. The fixed cost of operating the zoo per day is $480. The marginal cost of serving an additional customer (due to the sales of an additional ticket) is $150. Given the information, the zoo should charge $[? ] per ticket. Continue from the previous question. The deadweight loss caused by the zoo monopolist is $[ ?] per day.Post-merger T-Mobile/Sprint is developing new data plans targeted to certain regions of the country. Using billing records for customers in the west coast (CA-OR-WA) region, the priong team has determined that typical data usage can be estimated with the following demand: Q 1600-100P (where P is in cents per MB; and Q is in MB) And the pricing team has proposed the following charges: First 400 MB @ 5¢ Next 200 MB @ 3¢ Remaining MB @ 14 What will be the consumer surplus generated by the typical west coast customer, given this pricing schedule, if the customer uses marginal decision-making? If west coast consumers choose quantity based on the average price per MB, will quantity increase or decrease relative to marginal decision making? a) CS with marginal decision making: $92.50; using average price leads to consuming less than the optimal amount.TNBest is the only electricity company in a suburban area. Suppose that the demand for electricity for this area is ? = 500 − 10? and the cost of producing electricity is ?? = 500 + 2?.(i) If the city council want to ensure that TNBest doesn’t lose money, comment on the lowest price they can impose and TNBest’s profit and output level with this new price.
- A monopoly is considering selling several units of a homogeneous product as a single package. A typical consumer's demand for the product is Q = 80-0.5P, and the marginal cost of production is $ 100. a) Determine the optimal number of units to put in a package. b) How much should the firm charge for this package? c) How much additional profit does the company earn compared with charging this consumer a per-unit price?The Johnson Robot Company’s marketing managers estimate that the demand curve for the company’s robots in 2008 is P = 3,000 - 40Q where P is the price of a robot and Q is the number sold per month. If the firm wants to maximize its dollar sales volume, what price should it charge? a. $3000 b. $1000 c. $1500 d. $7501. The demand function for a certain brand of DVD is given byp = −0.01x^2− 0.2x + 8where p is the unit price in dollars and x is the quantity demanded each week,measured in units of a thousand. Determine the consumers’ surplus if the market price is set at $5 per disc. PART 2 of number 1: The supplier of the DVD in problem #1 will make x hundred units availablein the market when the unit price in dollars isp =√36 + 1.8xDetermine the producers’ surplus if the market price is set at $9 per unit. 2.The demand function for a certain kind of mattress is given byp = 600e^−0.04xwhere p is the unit price in dollars and x (in units of a hundred) is the quantity demanded each month.(a) Find the number of mattresses demanded per month if the unit price isset at $250 per mattress.(b) Use the results of part (a) to find the consumers’ surplus if the sellingprice is set at $250 per mattress. PART 2 of number 2: The manufacturer of the brand of mattress of problem #2 will make x hundred units…
- 13 sellers and 13 buyers are each willing to buy or sell one unit of a good, with values {$13, $12, $11, $10, $9, $8, $7, $6, $5, $4, $3, $2, $1}. If there is a single monopoly market-maker who keeps as profit the difference between bid and ask prices, the equilibrium quantity traded in the market is: A. 7. B. 4. C. 1. D. 10. Why?Elizabeth Airlines (EA) flies only one route: Chicago-Honolulu. The demand by business people for each flight is QA = 260 – 0.4P while the demand for students for each flight is QB = 240 - 0.6P. EA’s cost of running each flight is $30,000 plus $100 per passenger. The airline is able to perfectly distinguish students from business people. Which of the following statements is true? Note the demand equations must be rewritten as inverse demand equations to solve this problem. A. The profict maxmizing quantity sold to students is 110 and the profit maximizing price charged to students is $375. B. The profict maxmizing quantity sold to students is 90 and the profit maximizing price charged to students is $375. C. The profict maxmizing quantity sold to students is 110 and the profit maximizing price charged to students is $250. D. The profict maxmizing quantity sold to students is 90 and the profit maximizing price charged to students is $250.A market analysis employed by the “Sad Student Company” reveals that the number oflots of the game named “Handsome Killer: Revenge of the Teacher” ordered by thewholesalers when the game is offered at a price of dollars per lot is given by the formula:p=1500-2.5qa) Find the company’s total, marginal and average revenues b) Find the price and quantity maximizing the total revenue by first expressing therevenue as a function of price rather than of quantity
- A monopoly firm faces a demand curve given by the following equation: P = $500 − 10Q, where Q equals quantity sold per day. Its marginal cost curve is MC = $100 per unit. Assume that the firm faces no fixed cost. You may wish to arrive at the answers mathematically, or by using a graph (the graph is not required to be presented), either way, please provide a brief description of how you arrived at your results. d) Suppose a tax of $1,000 per day is imposed on the firm. How will this affect its price?e) How would the $1,000 per day tax affect its output per day?f) How would the $1,000 per day tax affect its profit per day?g) Now suppose a tax of $100 per unit is imposed. How will this affect the firm’s price?h) How would a $100 per unit tax affect the firm’s profit maximizing output per day?i) How would the $100 per unit tax affect the firms profit per day?A firm faces the following average revenue (demand) curve:P = 120 − 0.02Qwhere Q is weekly production and P is price, measured in cents per unit. The firm’s costfunction is given by C = 60Q + 25,000. Assume that the firm maximizes profits.i. What is the level of production, price, and total profit per week?ii. If the government decides to levy a tax of 14 cents per unit on this product, what will be thenew level of production, price, and profit?b. The United States currently imports all of its coffee. The annual demand for coffee by U.S.consumers is given by the demand curve Q = 250 – 10P, where Q is quantity (in millions ofpounds) and P is the market price per pound of coffee. World producers can harvest and shipcoffee to U.S. distributors at a constant marginal (= average) cost of $8 per pound. U.S.distributors can in turn distribute coffee for a constant $2 per pound. The U.S. coffee market iscompetitive. Congress is considering a tariff on coffee imports of $2 per pound.i. If there…A monopolist produces a certain good. The cost c for producing this good is given by c = 20q, whereq is the quantity produced. The (inverse) demand function for this product is given by p = 30 − 0.01q,where p is the price per unit of the product. We assume that the full produced quantity is sold. Thegovernment taxes the sales of the good and would like to maximize the received tax T .Suppose in first instance that the government introduces a tax of 4 monetary units per unit of theproduct sold. We determine how much the government then receives.