EBK MICROECONOMICS
2nd Edition
ISBN: 9780134458496
Author: List
Publisher: VST
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Question
Chapter 12, Problem 8Q
To determine
The relationship between price, MR and TR for a monopolist.
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- Question 5: Jimmy has a room that overlooks, from some distance, a major league baseball stadium. He decides to rent a telescope for $50 a week and charge his friends and classmates to use it to peep at the game for 30 seconds. He can act as a monopolist for renting out "peeps". For each person who takes a 30 second peep, it costs Jimmy $.20 to clean the eyepiece. Jimmy believes he has the following demand for his service: Price of a Peep $1.20 Quantity of peeps demanded 1.00 90 100 150 200 250 300 70 60 50 350 40 30 400 450 20 10 500 550 a) For each price, calculate the total revenue from selling peeps and themarginal revenue per peep. Price Quantity TR MR $1.20 100 90 100 150 200 70 250 60 300 350 50 40 30 400 450 20 500 10 550 b) At what quantity will Jimmy's profit be maximized? What price will he charge? What will his total profit be? c) Jimmy's landlady complains about all the visitors coming into the building and tells Jimmy to stop selling peeps. Jimmy discovers, though, if he…arrow_forwardDraw a graph indicating the profit maximizing level of price and output for a monopolist. In a related graph, show what happens to total revenue and total profit as output changes, and indicate the relationship between elasticity of demand and total revenue.arrow_forwardWhat is price discrimination? From the perspective of running a business, is this a good thing or bad thing for profits?arrow_forward
- How does price discrimination play a role in the economy?How does the idea of price discrimination apply to an industry?arrow_forwardThe table shows the demand schedule of a monopolist. Calculate marginal revenue and fill in the revenue column in the table. Assume that output can only be sold in integer amounts (i.e., 11 unit, 22 units, etc.). Once you have filled in marginal revenue, identify the quantity produced by the monopolist in this market. Quantity Price Marginal Marginal Cost Revenue 1 $13 $3 MR1 2 $12 $4 MR2 3 $11 $5 MR3 4 $10 $6 MR4 $9 $7 MR5 6. $8 $8 MR6 How many units does the monopolist produce? Quantity:arrow_forwardEconomics Please type your NUMERICAL answer in the space below. ENTER ONLY THE NUMBER. IF answers are in decimals, please round the number to one decimal point. A monopoly has the following total cost function and demand functions TC=20Q P=400-Q. Suppose that monopoly decides to practice 2nd degree price discrimination, as follows: it charges $360 for the first 40 units of output and $320 for the next 20 units. What is monopoly's profit with 2nd degree price discrimination? a Profits= b. What is Consumer Surplus? CS= C. What is Deadweight Loss? DWL=arrow_forward
- **YOU ONLY HAVE TO ANSWER QUESTION H**arrow_forwardWhat motivate an attraction to apply price discriminations? Will they succeed in applying price discrimination even though they are NOT a monopolist? Discuss your answer with a specific example of an attraction applying price discrimination in Malaysia.arrow_forwardHow much is total surplus if the market is perfectly competitive?How much is total surplus if the market is controlled by a single price monopolist?Suppose the single price monopolist started charging all customers the maximum price they are willing to pay. How much additional surplus is created?arrow_forward
- A monopolist knows that in order to expand the quantity of output it produces from 8 to 9 units it must lower the price of its output from £2 to £1. Calculate the quantity effect and the price effect. Use these results to calculate the monopolist’s marginal revenue of producing the 9th The marginal cost of producing the 9th unit is positive. Is it a good idea for the monopolist to produce the 9th unit?arrow_forwardThere is a monopolist in a market for a particular type of consumer goods. It is costly to create new types of products (brands) in this market, but consumers have different taste and thus some will prefer the new brand. Will the monopolist create too few brands or too many? Explain.arrow_forwardHow do I do this?arrow_forward
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