S and applications q7 consider the relationship

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ECON MICRO
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Chapter 8 / Exercise 8
ECON MICRO
McEachern
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13. Problems and Applications Q7Consider the relationship between monopoly pricing and price elasticity of demand.
14. Problems and Applications Q8
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ECON MICRO
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Chapter 8 / Exercise 8
ECON MICRO
McEachern
Expert Verified
You live in a town with 300 adults and 200 children, and you are thinking about putting on a playto entertain your neighbors and make some money. A play has a fixed cost of $2,000, but selling an extra ticket has zero marginal cost. Here are the demand schedules for your two types of customers:PriceAdultsChildren(Dollars) (Tickets) (Tickets)100091000820007300063000530010043002003300200230020013002000300200
The city council passes a law prohibiting you from charging different prices to different customers.Now you set a price of $7 for all tickets, resulting in $100in profit.Indicate whether each of the following groups of people is better off, worse off, or the same because of the law prohibiting price discrimination.Group of PeopleBetter Off Worse OffUnchangedAdultsChildrenYou, the ProducerSuppose the fixed cost of the play were $2,500 rather than $2,000.Complete the following sentences indicating how this would change your answers to the previous parts.
$400
16. Problems and Applications Q10Complete the following table by finding the price and quantity that maximize the company’s profit and the price and quantity that maximize social welfare.
ScenarioPriceQuantity(Dollars) (DVDs)Maximizes the company’s profit70030Maximizes social welfare550
Complete the following table by finding the price and quantity that maximize the company’s profit under each of the following options.OptionsPriceQuantityChange in Deadweight Loss(Dollars) (DVDs)Flat fee of 2,000 Ectenian dollars70030No change 50 percent of the profits70030No change 150 Ectenian dollars per unit sold75025Decrease 50 percent of the revenue80020Increase Alpia week 141. Sources of monopoly powerA monopolist, unlike a competitive firm, has some market power. It can raise its price, within limits, without the quantity demanded falling to zero. The main way it retains its market power isthrough barriers to entry—that is, other companies cannot enter the market to create competition in that particular industry.Complete the following table by indicating which barrier to entry appropriately explains why a monopoly exists in each scenario.ScenarioBarriers to EntryExclusiveOwnership of

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