55- 50 45 40- 35 30 25 20 15 10 234 56 -5 -10 -15 -20 +--. -25 -30 ---L -35 -40 -45 -50 -55 (4) Connect the ten dots to form a line and label it as Marginal Revenue (or MR). (5) Now, let's plot the straight line demand curve using the initial point (P, Q) = (S50, 0) and the endpoint (P, Q) - (S0, 10), taken from Columns 1 and 2. Label this line as Demand (or D) (Note: You are to connect two coordinates. No midpoint consideration is needed.) (6) From the graph, the MR curve cut the horizontal axis at the of the horizontal intercept. Answer: (7) At the point you identify in (6), is the demand elastic, unit elastic or inelastic (with respect to own price)? Answer:

55- 50 45 40- 35 30 25 20 15 10 234 56 -5 -10 -15 -20 +--. -25 -30 ---L -35 -40 -45 -50 -55 (4) Connect the ten dots to form a line and label it as Marginal Revenue (or MR). (5) Now, let's plot the straight line demand curve using the initial point (P, Q) = (S50, 0) and the endpoint (P, Q) - (S0, 10), taken from Columns 1 and 2. Label this line as Demand (or D) (Note: You are to connect two coordinates. No midpoint consideration is needed.) (6) From the graph, the MR curve cut the horizontal axis at the of the horizontal intercept. Answer: (7) At the point you identify in (6), is the demand elastic, unit elastic or inelastic (with respect to own price)? Answer:

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter24: Price-searcher Markets With High Entry Barriers

Section: Chapter Questions

Problem 13CQ

See similar textbooks

Similar questions

3. The demand function for Product X is Q = 100 – 2P. The company decided to set the price per product at $15. Is $15 the optimal price to charge to maximize revenues? What is the optimal price? -
Suppose the following data represent the market demand for catfish: Price (per unit) $20 19 18 17 16 15 14 13 12 11Quantity demanded (units per day) 12 13 14 15 16 17 18 19 20 21Total revenue — — — — — — — — — —Marginal revenue — — — — — — — — — —Compute total and marginal revenue to complete the table above. At what rate of output is total revenue maximized? At what rate of output is MR less than price? At what rate of output does MR first become negative? Graph the demand and MR curves.
2. Smile Bright toothpaste company has determined that the demand for its product depends on advertising expenditures A (in thousands of dollars) and the price charged P (in dollars) according to Q = 32A12 - 64P, where Q is the number of tubes of toothpaste sold. The company's marginal costs of production are constant and equal to 50 cents per tube. A. What levels of output, advertising expenditures, and price will maximize the firm's profits? B. Verify at the solution you have found in part A that the marginal revenue from advertising equals the price elasticity of demand.
Answer questions using table TABLE Fixed Variable Total Marginal Output Cost Cost Cost AVC ATC Cost 1 $400 2 $700 3 $918 4 $1200 5 $1650 $2352 Given: Fixed cost =$1000; price=$550. Fill in table On a piece of graph paper, draw a graph of the demand, marginal revenue, ATC, AVC, and MC curves. The demand curve would be perfectly elastic and it would be the same as the Marginal Revenue Curve and equal to the price. How much is the best level of output? Find total Profit. State the minimum point of the ATC curve in dollars and cents. State the minimum point of the AVC curve in dollars and cents.
Consider the demand function: where q = quantity, p = price d) Q = 2p²60p + 700 n For what values of p is demand (i) elastic; (ii) inelastic? What is the effect of a small price reduction on Total Revenue, when demand is (i) elastic; (ii) inelastic? e) Sketch the graphs of the Demand function, Total Revenue and Marginal Revenue as functions of p. Explain, using words and diagrams only, the relationship between Marginal Revenue and the Elasticity of Demand.
2. A market analysis employed by the "Sad Student Company" reveals that the number of lots of the game named "Handsome Killer: Revenge of the Teacher" ordered by the wholesalers when the game is offered at a price of dollars per lot is given by the formula: p=1500 – 2.5q a) Find the company's total, marginal and average revenues b) Find the price and quantity maximizing the total revenue by first expressing the revenue as a function of price rather than of quantity
Q7 Assume that Bandai Namco, the world's largest toy manufacturer, a monopolist, calculates that at its current toys output level, marginal revenue (MR) is $3.25 and marginal cost (MC) is $2.50. Bandai Namco could maximize profits or minimize losses by Multiple Choice decreasing price and leaving output unchanged. decreasing price and increasing output. increasing price and decreasing output. doing nothing. decreasing output and leaving price unchanged.
9. Problems and Applications Q3 Johnny Rockabilly has just finished recording his latest CD. His record company can produce the CD with no fixed cost and a variable cost of $5 per CD. The company's marketing department determines that the demand for the CD is as follows: Complete the following table by computing total revenue for each quantity listed and marginal revenue for each 10,000 increase in the quantity sold. Marginal Revenue (Dollars) Price (Dollars) 24 22 20 18 16 14 Number of CDs 10,000 20,000 30,000 40,000 50,000 60,000 Total Revenue (Dollars) AAAAA Profit is maximized at a quantity of 40,000 CDs and a price of $18 This results in a profit of If you were Johnny's agent, you would advise Johnny to demand a recording fee of $700,000 from the record company.
2. Calculating marginal revenue from a linear demand curve The blue curve on the following graph represents the demand curve facing a firm that can set its own prices. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per unit) 160 TOTAL REVENUE (Dol 140 120 2250 2000 1750 1500 1250 On the graph input tool, change the number found in the Quantity Demanded field to determine the prices that correspond to the production of 0, 10, 20, 25, 30, 40, and 50 units of output. Calculate the total revenue for each of these production levels. Then, on the following graph, use the green points (triangle symbol) to plot the results. 1000 750 500 250 0 5 10 15 20 25 30 35 40 45 50 QUANTITY (Units) 200 Demand 10 120 -40 15 30 35 QUANTITY (Number of units) 45 Graph Input Tool…
(Table: Demand for Cappuccinos at Charlie's Crazy Cappuccino House) Use Table: Demand for Cappuccinos at Charlie's Crazy Cappuccino House. Charlie's Crazy Cappuccino House is the only source of cappuccinos for hundreds of miles in any direction. Assume Charlie's marginal cost of selling cappuccinos is constant at $2 and that he has no fixed costs. If the government forces Charlie to charge a price that eliminates deadweight loss, Charlie will charge cups. per cup and sell Table: Demand for Cappuccinos at Charlie's Crazy Cappuccino House Price of Cappuccinos (per cup) $10 9 8 7 6 5 4 3 2 1 0 $0; 10 $2;8 $4; 6 $5; 5 Quantity of Cappuccinos (daily cups) 0 1 2 3 4 5 7 8 9 10
1. The estimated demand curve for a firm's product is represented by the equation: Q = 66000 – 10P where O is the quantity sold per year and P is the price per unit. (a) Based on the estimated demand curve, write the equations for (i) (ii) (iii) marginal revenue total revenue average revenue (b) What is the maximum total revenue per year that the firm can obtain from sales of its product? (Give the exact dollar amount and show how you determined it.) (c) Calculate the point price elasticity of demand for the firms' product when 2 = 50000 . Is the demand elastic or inelastic at that quantity? How do you know?
80-D 4. The demand function for a product marketed by a company is p where D is the number of units and p 4 is the price per unit. Determine the value of D and the total amount that will achieve maximum revenue.