Principles of Microeconomics
Solutions
Principles of Microeconomics
You live in a town with 300 Adults and 200 children, and you arc thinking about putting on a play to entertain your neighbors and make some money. A play has a fixed cost of $2,000, but selling an extra ticket has zero marginal cost. Here are the demand schedules for your two types of customer:
a. To maximize profit, what price would you charge for an adult ticket? For a child's ticket? How much profit do you make?
b. The city council passes a law prohibiting you from charging different prices to different customers. What price do you set for a ticket now? How much profit do you make?
c. Who is worse off because of the law prohibiting price discrimination? Who is better off? (If you can, quantify the changes in welfare.)
d. If the fixed cost of the play were $2,500 rather than $2,000, how would your answers to parts (a), (b), and (c) change?
Subpart (a):
Total revenue can be calculated by using the following formula.
Substitute the respective values in Equation (1) to calculate the total revenue at 100 for adults.
Total revenue is $900.
Since no variable cost is involved, the profit-maximizing outcome is same as the maximizing total revenue. The total revenue obtained from selling to each type of consumer is depicted in Table 1 using Equation (1).
| Price | Quantity of Adult Tickets | Total Revenue from Sale of Adult Tickets | Quantity of Child Tickets | Total Revenue from Sale of Child Tickets |
| 10 | 0 | 0 | 0 | 0 |
| 9 | 100 | 900 | 0 | 0 |
| 8 | 200 </ |
Subpart (b):
Subpart (c):
Subpart (d):
Chapter 15 Solutions
Additional Business Solutions
Find more solutions based on key concepts
Show solutions addSuppose Americans decide to save more of their in-comes. If banks lend this extra saving to businesses, which u...
Principles of Economics (MindTap Course List)
A subject is allowed a sequence of glimpses to detect a target. Let Gi = {the target is detected on the ith gli...
Probability and Statistics for Engineering and the Sciences
(Pitfalls of Economic Analysis) Review the discussion of pitfalls in economic thinking in this chapter. Then id...
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Consider a market in which Bert from problem 4 is the buyer and Ernie from problem 5 is the seller. a. Use Erni...
Principles of Macroeconomics (MindTap Course List)
The following data show the number of rental cars in service for three rental car companies: Hertz, Avis, and D...
STATISTICS F/BUSINESS+ECONOMICS-TEXT
If all quantities produced rise by 10 percent and all prices fall by 10 percent, which of the following occurs?...
Brief Principles of Macroeconomics (MindTap Course List)
BOND VALUATION Nesmith Corporations outstanding bonds have a 1,000 par value, an 8% semiannual coupon, 14 years...
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
Amortization and depletion entries Data related to the acquisition of timber rights and intangible assets durin...
Financial & Managerial Accounting
Explain the concept of functional dependence.
Accounting Information Systems
Define the word manager without using the word management in your definition.
Foundations of Business (MindTap Course List)
Why are accruals called spontaneous sources of funds, what are their costs, and why don't firms use more of the...
Fundamentals of Financial Management (MindTap Course List)
Problem 4-61 B Recording Petty Cash Transactions Chicago Inc. had a balance of $1,200 in cash in its petty cash...
Cornerstones of Financial Accounting
Why should the responsibility for maintaining the accounting records be separated from the responsibility for o...
Corporate Financial Accounting
Request Refusal: Cant Evict Noisy Tenant. As the owner of Edgewood Towne Center, you must respond to the reques...
Essentials of Business Communication (MindTap Course List)
SECURITY MARKET LINE You plan to invest in the Kish Hedge Fund, which has total capital of 500 million invested...
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Break-even sales Anheuser-Busch InBev SA/NV (BUD) reported the following operating information for a recent yea...
Financial And Managerial Accounting
Why might economic advisers to the president disagree about a question of policy?
Essentials of Economics (MindTap Course List)
El Dorado Inc. has monthly cash expenses of 168,500. On December 31, the cash balance is 1,415,400. a. Compute...
Financial Accounting
Which of these is added to the ending bank statement balance? (a) Outstanding checks (b) Service charges (c) Ch...
College Accounting, Chapters 1-27
When Werner and Thompson, a Los Angeles business and financial management firm, offered Iranian-born Firoz Bahm...
Management, Loose-Leaf Version
Explain how relation-ship marketing can move customers up the loyalty ladder.
Contemporary Marketing
Explain the concept of ethical behavior
MKTG 12:STUDENT ED.-TEXT
SYSTEM DOCUMENTATIONCASH DISBURSEMENT PROCEDURES(CENTRALIZED COMPUTER) This system employs a central computer a...
Accounting Information Systems
Barb Company has provided information on intangible assets as follows: 1. A patent was purchased from Lou Compa...
Intermediate Accounting: Reporting And Analysis
The Two Cost Systems Sacred Heart Hospital (SHH) faces skyrocketing nursing costs, all of which relate to its t...
Managerial Accounting: The Cornerstone of Business Decision-Making
C. R. McIntyre Company sells candy wholesale, primarily to vending machine operators. Terms of sales on account...
College Accounting (Book Only): A Career Approach
J.D. Power and Associates conducts vehicle quality surveys to provide automobile manufacturers with consumer sa...
Statistics for Business & Economics, Revised (MindTap Course List)
The following table shows Hillarys demand schedule for Cherry Blossom Makeup. Graph Hillarys demand curve.
Exploring Economics
Entry for issuing materials Materials issued for the current month are as follows: Requisition No. Material Job...
Financial & Managerial Accounting
As a first step, we need to estimate what percentage of MMMs capital comes from debt, preferred stock, and comm...
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
MATURITY RISK PREMIUM An investor in Treasury securities expects inflation to be 2.5% in Year 1,3.2% in Year 2,...
Fundamentals of Financial Management (MindTap Course List)
What are the major advantages of the use of special journals?
Financial Accounting
Number of times interest charges are earned Iacouva Company reported the following on the company's income stat...
Accounting (Text Only)
Mooney Labs had the following payroll for the week ended February 28: Assumed tax rates are as follows: a. FICA...
College Accounting (Book Only): A Career Approach
List and explain the three reasons the aggregate-demand curve slopes downward.
Principles of Macroeconomics (MindTap Course List)
What is the systems development life cycle (SDLC)?
Pkg Acc Infor Systems MS VISIO CD
NOTES RECEIVABLE ENTRIES J. K. Pratt Co. had the following transactions: 20-1 REQUIRED Record the transactions ...
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
What is a major difference between the effects of a quota and the effects of a tariff?
Microeconomics
Which of the following best defines the vicious circle of poverty? a. Countries are poor because they cannot af...
Economics For Today
What are the assumptions and predictions of the simple quantity theory of money? Does the simple quantity theor...
Economics (MindTap Course List)
A layperson says that a proposed government project simply costs too much and therefore shouldnt be undertaken....
Macroeconomics
Busy-Bee Baking Company produces a variety of breads. The plant manager would like to expand production into sw...
Cornerstones of Cost Management (Cornerstones Series)
When are expenses of benefits such as vacation pay and retirement pay recorded? Explain.
PAYROLL ACCT.,2019 ED.(LL)-TEXT
A firm has consistently adjusted it allowance account at the end of the fiscal year by adding a fixed percent o...
Survey of Accounting (Accounting I)
Four items are for sale in the Dollar Value store. The product and sum of their prices is 7.11. What is the pri...
Practical Management Science
Discuss the following statement: Supply management not only buys parts or services from suppliersit often buys ...
Purchasing and Supply Chain Management
Errors in trial balance Identify the errors in the following trial balance. All accounts have normal balances. ...
Corporate Financial Accounting
