Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 14, Problem 7PA
Subpart (a):
To determine
The
Subpart (b):
To determine
Calculate the consumer surplus.
Subpart (c):
To determine
Calculate profit.
Subpart (d):
To determine
The consumer surplus.
Subpart (e):
To determine
Favors of admission fee.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The residents of the town Ectenia all love economics and the mayor proposes building an economics musuem. The musuem has a fixed cost of $2,400,000 and no variable costs. There are 100,000 town residents, and each has the same demand for musuem visits:
QD =10-P, where P is the price of admission
a. Graph the musuems average-total-cost curve and its marginal cost curve. What kind of market would describe the musuem?
b. The mayor proposes financing the musuem with a lump- sum tax of $24 and then opening the musuem to the public for free. How many times would each person visit? Calculate the benefit each person would get from the musuem, measured as consumer surplus minus the new tax.
c. The mayor's anti tax opponent says the musuem should finance itself by charging an admission fee. What is the lowest price the musuem can charge without incurring losses?
d. For the break even price you found in part (c), Calculate each resident's consumer surplus. Compared with the mayor's plan, who is…
a) True or False and Explain: A profit maximizing monopolist has no limit to how high they set the price.
b) True of False and explain: When there are economies of scale in production it is possible for a competitive market to sustain the competitive equilibrium.
c) When there are economies of scale in production, why is it beneficial to have only one producer?
A publisher faces the following demand schedule for the next novel from one of its popular authors:Price Quantity Demanded100 090 100,00080 200,00070 300,00060 400,00050 500,00040 600,000 530 700,00020 800,00010 900,0000 1,000,000The author is paid $2 million to write the book, and the marginal cost of publishing the book is a constant $30 per book.d. In your graph, shade in the deadweight loss. Explain in words what this means. e. If the author was paid $3 million instead of $2 million to write the book, how would this affectthe publisher’s decision regarding the price to charge? Explain. f. Suppose the publisher was not profit-maximizing but was concerned with maximizing economicefficiency. What price would it charge for the book? How much profit would it make at thisprice? (
Chapter 14 Solutions
Essentials of Economics (MindTap Course List)
Ch. 14.1 - Prob. 1QQCh. 14.2 - Prob. 2QQCh. 14.3 - Prob. 3QQCh. 14.4 - Prob. 4QQCh. 14.5 - Prob. 5QQCh. 14 - Prob. 1CQQCh. 14 - Prob. 2CQQCh. 14 - Prob. 3CQQCh. 14 - Prob. 4CQQCh. 14 - Prob. 5CQQ
Ch. 14 - Prob. 6CQQCh. 14 - Prob. 1QRCh. 14 - Prob. 2QRCh. 14 - Prob. 3QRCh. 14 - Prob. 4QRCh. 14 - Prob. 5QRCh. 14 - Prob. 6QRCh. 14 - Prob. 7QRCh. 14 - Prob. 8QRCh. 14 - Prob. 1PACh. 14 - Prob. 2PACh. 14 - Prob. 3PACh. 14 - Prob. 4PACh. 14 - Prob. 5PACh. 14 - Prob. 6PACh. 14 - Prob. 7PACh. 14 - Prob. 8PACh. 14 - Prob. 9PACh. 14 - Prob. 10PACh. 14 - Prob. 11PACh. 14 - Prob. 12PA
Knowledge Booster
Similar questions
- Ajax Cleaning Products is a medium-sized firm operating in an industry dominated by one large firm—Tile King. Ajax produces a multiheaded tunnel wall scrubber that is similar to a model produced by Tile King. Ajax decides to charge the same price as Tile King to avoid the possibility of a price war. The pnce charged by Tile King is $20,000. Ajax has the following short-run cost curve: TC=800,0005,000Q+100Q2 Compute the marginal cost curve for Ajax. Given Ajaxs pricing strategy, what is the marginal venue function for Ajax? Compute the profit-maximizing level of output for Ajax. Compute Ajaxs total dollar profits.arrow_forwardThere is a monopolist, Concrete Mex, in the concrete market in Mexico. The demand function is Qd= 100-50p. The marginal cost of production is c = 0.4. a) Suppose ConcreteMex is a price taker in the competitive market in Texas. If the market price in Texas is Pc= 0.4, what is ConcreteMex’s supply Qs and profit in Texas? What is its supply if the price is Pc = 3? b) In a diagram, illustrate how the marginal cost and average total cost in Texas vary as a function of Q, and how ConcreteMex’s supply in Texas varies with price Pc. c) If the price in Texas is ?! = 3, what is ConcreteMex’s profit at its optimal supply in part a? Is the profit positive (or equal to zero)? Explain why the firm can earn positive (zero) profit in the competitive market.arrow_forwardTwo firms are engaged in Bertrand competition. There are 10,000 people in the population, each of whom is willing to pay at most 10 for at most one unit of the good. Both firms have a constant marginal cost of 5. Each firm is allocated half the market. It costs a customer s to switch from one firm to the other. Customers know what prices are being charged. Law or custom restricts the firms to charging whole-dollar amounts (e.g., they can charge 6, but not 6.50). a. Suppose that s = 0. What are the Nash equilibria of this model? Why does discrete (whole-dollar) pricing result in more equilibria than continuous pricing? b. Suppose that s = 2. What is (are) the Nash equilibrium (equilibria) of this model? c. Suppose that s = 4. What is (are) the Nash equilibrium (equilibria) of this model? d. Comparing the expected profits in (b) to those in (c), what is the value of raising customers’ switching costs from 2 to 4?.arrow_forward
- A6 In Changlun, Kedah, there are two bakers, Abu and Bakar. Their bread taste the same and nobody can tell the difference. Abu has constant marginal costs of RM1 per loaf of bread. Bakar has constant marginal costs of RM2 per loaf. Fixed costs are zero for both of them. The inverse demand function for bread in Changlun is p(q) = 6 – 0.01(qA + qB), where q is the total number of loaves sold per day. Find the reaction function for Abu and Bakar. What is the Cournot Nash equilibrium number of loaves of bread for each baker?arrow_forwardSuppose the JLFB movie production company has produced two movies, A and B, and distributes them to theaters with willingness to pay for the two movies, which is shown below, Movie A Movie BA. Smith Theater $135 $95J. Schumpeter Theater $85 $115 a. Which package will result in the largest profit for the JFLB movie production company?arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc