Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Chapter 19, Problem 3MC
To determine
Total profit.
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An all-you-can-eat buffet attracts two types of customers. Regular customers value the buffet at $20 and eat $5 of food in costs to the restaurant. Hungry customers value the buffet at $40 and eat $10 of food. If there are 100 of each type in the market for a buffet dinner, what is the restaurant’s maximum profit?
A. What is the profit-maximizing price and quantity?
B. What is the revenue-maximizing price and quantity?
C. When total cost exceeds total revenue, profits are?
a. How much would the firm’s revenue change if it lowered price from $12 to $10?
Revenue change: $
b. How much would the firm’s revenue change if it lowered price from $4 to $2?
Revenue change:
c. What price maximizes the firm’s total revenues?
Price that maximizes total revenues:
Chapter 19 Solutions
Managerial Economics: A Problem Solving Approach
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