Microeconomics (7th Edition)
7th Edition
ISBN: 9780134737508
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 10, Problem 10.2CTE
To determine
Exception in law of diminishing
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Why do you think that average and marginal cost curves have the same general shape?
GIVE ME AN EXAMPLE OF MARGINAL ANALYSIS WITH MARGINAL R AND MARGINAL C IN A TABLE.
In an article about the financial problems of USA Today, Newsweek reported that the paper was losing about $20 million a year. A Wall Street analyst said that the paper should raise its price from 50 cents to 75 cents, which he estimated would bring in an additional $65 million a year. The paper’s publisher rejected the idea, saying that circulation could drop sharply after a price increase, citing The Wall Street Journal’s experience after it increased its price to 75 cents.
1- What implicit assumptions are the publisher and the analyst making about price elasticity?
Chapter 10 Solutions
Microeconomics (7th Edition)
Ch. 10.A - Prob. 1RQCh. 10.A - Prob. 2RQCh. 10.A - Prob. 3RQCh. 10.A - Prob. 4PACh. 10.A - Prob. 5PACh. 10.A - Prob. 6PACh. 10.A - Prob. 7PACh. 10.A - Prob. 8PACh. 10.A - Prob. 9PACh. 10.A - Prob. 10PA
Ch. 10.A - Prob. 11PACh. 10.A - Prob. 12PACh. 10 - Prob. 10.1.1RQCh. 10 - Prob. 10.1.2RQCh. 10 - Prob. 10.1.3RQCh. 10 - Prob. 10.1.4RQCh. 10 - Prob. 10.1.5PACh. 10 - Prob. 10.1.6PACh. 10 - Prob. 10.1.7PACh. 10 - Prob. 10.1.8PACh. 10 - Prob. 10.1.9PACh. 10 - Prob. 10.1.10PACh. 10 - Prob. 10.1.11PACh. 10 - Prob. 10.1.12PACh. 10 - Prob. 10.2.1RQCh. 10 - Prob. 10.2.2RQCh. 10 - Prob. 10.2.3RQCh. 10 - Prob. 10.2.4PACh. 10 - Prob. 10.2.5PACh. 10 - Prob. 10.2.6PACh. 10 - Prob. 10.2.7PACh. 10 - Prob. 10.2.8PACh. 10 - Prob. 10.2.9PACh. 10 - Prob. 10.2.10PACh. 10 - Prob. 10.2.11PACh. 10 - Prob. 10.3.1RQCh. 10 - Prob. 10.3.2RQCh. 10 - Prob. 10.3.3RQCh. 10 - Prob. 10.3.4PACh. 10 - Prob. 10.3.5PACh. 10 - Prob. 10.3.6PACh. 10 - Prob. 10.3.7PACh. 10 - Prob. 10.3.8PACh. 10 - Prob. 10.3.9PACh. 10 - Prob. 10.4.1RQCh. 10 - Prob. 10.4.2RQCh. 10 - Prob. 10.4.3RQCh. 10 - Prob. 10.4.4RQCh. 10 - Prob. 10.4.5PACh. 10 - Prob. 10.4.6PACh. 10 - Prob. 10.4.7PACh. 10 - Prob. 10.4.8PACh. 10 - Prob. 10.4.9PACh. 10 - Prob. 10.4.10PACh. 10 - Prob. 10.4.11PACh. 10 - Prob. 10.4.12PACh. 10 - Prob. 10.4.13PACh. 10 - Prob. 10.4.14PACh. 10 - Prob. 10.4.15PACh. 10 - Prob. 10.4.16PACh. 10 - Prob. 10.1CTECh. 10 - Prob. 10.2CTECh. 10 - Prob. 10.3CTE
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- briefly Define the Law of Diminishing Marginal Returns and giving a clear example, explain why this“Law” is important in Economics.arrow_forwardQ. In an article about the financial problems of USA Today, Newsweek reported that the paper was losing about $20 million a year. A Wall Street analyst said that the paper should raise its price from 50 cents to 75 cents, which he estimated would bring in an additional $65 million a year. The paper's publisher rejected the idea, saying that circulation could drop sharply after a price increase, citing the Wall Street Journal's experience after it increased its price to 75 cents. What implicit assumptions are the publisher and the analyst making about price elasticity? Thank you for your answer.arrow_forwardGive one limitation of marginal analysis and explain why?arrow_forward
- [Related to Solved Problem 10.4 on page 330] In an article in the Quarterly Journal of Economics, Ted O’Donoghue and Matthew Rabin make the following observation: “People have self-control problems caused by a tendency to pursue immediate gratification in a way that their ‘longrun selves’ do not appreciate.” What do they mean by a person’s “long-run self ”? Give two examples of people pursuing immediate gratification that their long-run selves would not appreciate. Based on Ted O’Donoghue and Matthew Rabin, “Choice and Procrastination,” Quarterly Journal of Economics, February 2001, pp. 125–126.arrow_forwardBriefly explain and graphically illustrate the property of diminishing margincal rate of substitution and its relation to marginal utilities.arrow_forwardKiran and Amna live in IBA hostel. They own a small business in which they make brownies and pasta and sell them to people on campus. As shown in the table on the following page, Kiran can make 30 brownies per hour but only 6 bowls of pasta. Amna is a bit slower and can make only 24 brownies or 4 bowls of pasta in an hour Suppose that Kristen and Anna can sell all their brownies for PKR10 each and all their pasta bowls for PKR 50 each. If each of them worked 20 hours per week, how should they split their time between brownies and pasta? What is their maximum joint revenue?arrow_forward
- Why would a hotel stay open during a slow month when it seems like the revenue from so few customers could not possibly cover all the costs of operating a large hotel? Use microeconomic terms to explainarrow_forwardBriefly explain (a) Why the producer prefers stage 2 in production process.arrow_forwardIn an article in the New York Times (Is Junk Food Really Cheaper? September 24, 2011), Mark Bittman compares the cost of a McDonalds meal for four ($28) to the cost of a home cooked chicken with vegetables dinner ($13.78). An economist would say that the "true" cost of the home cooked meal is than $13.78, as we need to add to the cost of groceries (money you pay to buy the ingredients chicken and vegetables) also the lower, amount of money you will be saving when you spend less money on food. lower, negative health effects of eating too much fast food lower, opportunity cost of time you spend to prepare and cook your dinner. higher, benefits of healthy home. cooking, higher, opportunity cost of time you spend to prepare and cook your dinner.arrow_forward
- Explain how an economically rational bank robber should determine how many minutes to spend in the bank committing the robbery. Be sure to explain the principle that a rational bank robber would apply to this decision, and how that principle would be applied.arrow_forwardAnswer this question based on the table in the picture below Suppose six units are currently being produced, what action should be taken in accordance with the marginal principle?arrow_forwardgive me an example of marginal analysiss in a tablearrow_forward
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