Principles of Economics (MindTap Course List)
8th Edition
ISBN: 9781305585126
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 15, Problem 11PA
To determine
The diagrammatic representation of demand and cost curves .
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Caroline and Frances are debating the pricing strategy of several airlines. Caroline argues, “When airlines restrict discounted tickets to people who book well in advance and stay over on a Saturday, it is not price discrimination, because the restrictions have nothing to do with individual buyers' willingness to pay.” However, Frances says, “The airlines' stay-over restrictions are a form of price discrimination, because they roughly split the market into two separate groups that are willing to pay two different amounts.”
Economists generally agree with who?
Suppose that you are a manager for a firm like EBC Brakes, which manufactures brakes for automobiles and motorcycles. Your company has two plants, one in the United States and the other in the United Kingdom. The following tables include estimated demand and marginal revenue for your brakes, along with the marginal costs at the two factories.
what quantity and price maximize your firms profit?
What is the profit – maximizing number of brakes produced in the U.S. plant? In the U.K. plant?
Quantity Demanded (brakes per hour)
Price
(dollars per brake)
Quantity Produced in the U.K. plant (brakes per hour)
Quantity Produced in the U.S. (brakes per hour)
Total Quantity Produced
Marginal Cost (dollars per brake)
Marginal Revenue (dollars per brake)
104
196
47
42
89
66
92
105
195
48
44
92
68
90
106
194
49
46
95
70
88
107
193
50
48
98
72
86
108
192
51
50
101
74
84
109
191
52
52
104…
Ilia is driving home from work. She needs to buy gas and notices an Exxon-Mobil station on one side of the street and a Shell station on the other side of the street. Although run by different companies, the two stations sell gasoline at the same price.
a. The most likely reason that the price is the same is that
_gas stations always make a profit, so they can charge any price they want.
_drivers need gas and are willing to pay whatever price a gas station charges.
_government regulation requires both gas stations to charge the same price.
_consumers view gasoline from different gas stations as perfect substitutes.
b. If one station increases its price,
_it will be fined by the government.
_it will sell more gasoline.
_it will make a higher profit.
_it will lose customers to the cheaper station across the street.
Chapter 15 Solutions
Principles of Economics (MindTap Course List)
Ch. 15.1 - Prob. 1QQCh. 15.2 - Prob. 2QQCh. 15.3 - Prob. 3QQCh. 15.4 - Prob. 4QQCh. 15.5 - Prob. 5QQCh. 15 - Prob. 1CQQCh. 15 - Prob. 2CQQCh. 15 - Prob. 3CQQCh. 15 - Prob. 4CQQCh. 15 - Prob. 5CQQ
Ch. 15 - Prob. 6CQQCh. 15 - Prob. 1QRCh. 15 - Prob. 2QRCh. 15 - Prob. 3QRCh. 15 - Prob. 4QRCh. 15 - Prob. 5QRCh. 15 - Prob. 6QRCh. 15 - Prob. 7QRCh. 15 - Prob. 8QRCh. 15 - Prob. 1PACh. 15 - Prob. 2PACh. 15 - Prob. 3PACh. 15 - Prob. 4PACh. 15 - Prob. 5PACh. 15 - Prob. 6PACh. 15 - Prob. 7PACh. 15 - Prob. 8PACh. 15 - Prob. 9PACh. 15 - Prob. 10PACh. 15 - Prob. 11PACh. 15 - Prob. 12PA
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