Unformatted text preview: minimu m p rice of 15 instead of 10. What will happen to the equilibrium retail price, demand, and total revenue if retailers hav e to pay 15? 4. Assume AD = 50 and FP = 10, as in question 1. The American Medical Association just came out with a repo rt clai ming sweet onions reduces t he chan ces of getting colon cancer. A consumer survey you have conducted indicates that, regardless of price, consumers will increase their consumption of s weet onions by 5% because o f this report . If the 5 % increase in demand is correct for 2006, wh at will the retail price and s ales be for 2006? (Hint: the ans wer to this question shoul d be determined by shifting the demand curve). Question 2
The New York State Electric and Gas (NYSEG) Co mpany, which serves Upstate New York is for all practical pu rposes a monopoly. Assume that the market demand, marginal revenue, and total costs faced by NYSEG is: P = 300 – 2 Q (demand) MR = 300 – 4 Q (marginal revenue) TC = 100 Q (total cost) AEM 4150 review section 15 Octob er, 2008 where P is the price of electricity, Q is total quantity of electricity, MR is marginal revenue, and TC is total cost of supplying electricity. 1. Assuming NYSEG acts as a monopolist, calculate the opti...
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- Fall '07
- Supply And Demand, retail price, qu antity, weet onions