Dis9 - Econ 101: Principles of Microeconomics Fall 2009...

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Econ 101: Principles of Microeconomics Fall 2009 Discussion Section #9 Handout November 18 & 20, 2009 Question 1 TotsPoses, Inc., a profit-maximizing business, is the only photography business in town that specializes in portraits of small children. George, who owns and runs TotsPoses, expects to encounter an average of eight customers per day, each with a reservation price shown in the following table: Customers Reservation price ($ per photo) Total Revenue Average Revenue Marginal Revenue A 50 B 46 C 42 D 38 E 34 F 30 G 26 H 22 a) What are total revenues, average revenues, and marginal revenues? Fill in the table. b) What is the highest price George can charge if he wants to sell 4 photographs? c) If George’s marginal cost is constant at $15, how many photographs will he sell? Question 2 The Laser Eye Clinic (LEC) is the only provider of laser eye surgery in a medium- sized city. Its fixed costs are $2.5 million per year. Its variable (and marginal) cost of each surgery is $500. Demand for its surgeries can be written as P = 2,500 - 0.25Q,
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Dis9 - Econ 101: Principles of Microeconomics Fall 2009...

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