Monopolies - 1. Dr Wiseman decides to host a special...

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1. Dr Wiseman decides to host a special lecture on how to make Hungarian crepes. He estimates the demand curve for the lecture to be P = 10 – Q/40. He rents a large lecture hall that holds 300 people and costs $700; he also hires staff to work for $200 for the night. a. What is the marginal revenue of selling 50 tickets at a price so that 50 people show up? 100 people? 200 people? b. What are the marginal costs associated with serving 50 people, 100 people, and 150 people? c. How much revenue would be made if the tickets were priced to fill every seat? d. How much revenue would be made if tickets were priced to maximize profit and they could only be priced to attract 50, 100, 200, and 300 people? 2. Quantity Price MR 12 20 16 16
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20 14 24 12 28 10 32 8 A. How would you know this is a monopoly? B. How many units would this monopoly sell if it could perfectly discriminate and the marginal cost was constant at 5? If the marginal
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This note was uploaded on 07/01/2011 for the course ECO 304K taught by Professor Hickenbottom during the Fall '10 term at University of Texas.

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Monopolies - 1. Dr Wiseman decides to host a special...

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