ECONOMICS - UPDATED
20th Edition
ISBN: 9781259795862
Author: McConnell
Publisher: MCGRAW-HILL CUSTOM PUBLISHING
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Question
Chapter 21, Problem 1P
Subpart (a):
To determine
Whether the valley will be ruled as a monopoly .
Subpart (b):
To determine
can the valley be ruled as monopoly by the court when all barriers are relevant.
Subpart (c):
To determine
When all fruits are there, can the valley be ruled as monopoly by court.
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A large share of the world supply of diamonds comes from Russia and South Africa. Suppose that the marginal cost of mining diamonds is constant at $3,000 per diamond, and the demand for diamonds is described by the following schedule: see attached
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Why…
1. Rio live in a town with 300 adults and 200 children, and he is thinking about putting
on a play to entertain your neighbors and make some money. A play has a fixed cost
of $2,000 except all cost like maintenance costs until two years, but selling an extra
ticket has zero marginal cost. Here are the demand schedules for his two types of
customer:
Price
Adults
Children
$10
9
100
8
200
7
300
6
300
300
100
4
300
200
300
200
300
200
1
300
200
300
200
a. To maximize profit, what price would he charge for an adult ticket? For a child's
ticket? How much the profit? (Hint: total cost for this year include fixed cost)
b. Suppose in this year, the city council passes a law prohibiting him from charging
different prices to different customers. What price does he set for a ticket now?
How much profit now? (Hint: when quantity of produced yield maximum revenue
or the sum of these both revenues sastify)
Suppose that Samsung’s production costs are the same in both China and India. Also suppose that Samsung can produce cell phones in China for an average cost of $10 per phone for 300 million phones, $12 per phone for 200 million phones, and $15 per phone for 100 million phones. If customers in India demand 100 million phones and customers in China demand 200 million phones, Samsung’s lowest-cost option is to
A.
produce 150 million phones in India for Indian demand and 50 million to export to China and produce 150 million phones in China for Chinese demand.
B.
produce 100 million phones in India for Indian demand and produce 200 million phones in China for Chinese demand.
C.
produce phones only in India and export phones to China.
D.
produce phones only in China and export phones to India.
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