3. The components of marginal revenue Felix's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Felix produced eight fire engines, but he has decided to increase production to nine fire engines. The following graph shows the demand curve Felix faces. As you can see, to sell the additional engine, Felix must lower his price from $75,000 to $50,000 per fire engine. Note that while Felix gains revenue from the additional engine he sells, he also loses revenue from the initial eight engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial eight engines by selling at $50,000 rather than $75,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $50,000. er fire engine) 250 225 200 175 Revenue Lost ?

3. The components of marginal revenue Felix's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Felix produced eight fire engines, but he has decided to increase production to nine fire engines. The following graph shows the demand curve Felix faces. As you can see, to sell the additional engine, Felix must lower his price from $75,000 to $50,000 per fire engine. Note that while Felix gains revenue from the additional engine he sells, he also loses revenue from the initial eight engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial eight engines by selling at $50,000 rather than $75,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $50,000. er fire engine) 250 225 200 175 Revenue Lost ?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

The soybean industry is a constant cost industry. A new study revealing negative health effects of soymilk permanently decreases the number of buyers in the soybean market. Due to the decrease in demand, the equilibrium price of soybeans ______ in the long run, the equilibrium quantity of soybeans ______in the long run, and the number of firms in the market will _____ in the long run. Word Bank: Decreases, Decreases, Decreases, Increases, Increases, Increases, does not change, does not change, does not change.
35 3. The components of marginal revenue Raphael's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Raphael produced five fire engines, but he has decided to increase production to six fire engines. The following graph shows the demand curve Raphael Faces. As you can see, to sell the additional engine, Raphael must lower his price from $160,000 to $120,000 per fire engine. Note that although Raphael gains revenue from the additional engine he sells, he also loses revenue from the initial five engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial five engines by selling at $120,000 rather than $160,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $120,000. 200 180 100 5 5 5 5 PRICE (Thousands of dollars par fra angina) 35 Domand Revenue Last 0…
How do you find Profit maximization using total cost and total revenue curves in a price takers market?
The following table contains different consumers' values for three software titles: PowerPoint, Excel, and Word. Suppose there are 100 consumers of each type. It costs Microsoft $0 to produce each piece of software. Consumer Types Administrative Assistants Marketing/Sales Accountants Price per each Profit on just that software PowerPoint Total profit on all software $76 $200 $25 A la carte pricing If Microsoft were to sell each of the software individually, what price should it set for each and what would its profits on each be? PowerPoint Excel $100 $100 $250 $ Word $200 $125 $25 Excel Word Bundled Pricing If Microsoft were to only sell the three products as a bundle, what price should they set for bundle and what would profits be? Bundled Price $ Total Profit S Mixed Pricing Suppose that Microsoft offered a bundle of all three for $375, but it also offers a price of $200 for each software separately. What is the new profit level for this pricing scheme?$ Is this mixed-pricing scheme…
10. Figure 5 shows the graph of the short-run cost curves for Tim-T-Shirts, a firm operating in a perfectly competitive market. P* denotes the current price for Tim T-Shirts. Based on the information in the graph, which of the following should we expect in the long run? a) New firms will enter the market. b) The number of firms in the market will remain unchanged. c) Gray Sweaters will increase the current price of sweaters. d) There is not enough information to answer the question. Figure 5 Price and Costs P* MC ATC AVC Quantity
Hand written solutions are strictly prohibited
Paulina sells beef in a competitive market where the price is $8 per pound. Her total revenue and total costs are given in the table below. Quantity of Total revenue Total cost beef (lb.) 0 1 2 3 4 ($) 0 8 16 24 32 ($) 4 8 13 19 27 Profit ($) 0 8 pounds Marginal revenue ($) c. What is the profit-maximizing (or loss-minimizing) quantity? Marginal Marginal cost ($) profit ($) a. Complete the table. Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. b. At what quantity does marginal revenue equal marginal cost? pounds A
Austin is a dot-com entrepreneur who has established a Web site at which people can design and buy awatch. Austin pays $900 a month for a Web server and Internet connection. The watches that customers design are made to order by another firm, and Austin pays this firm $120 a watch. Austin has no other costs. The table shows the demand schedule for Austin's watches. Austin is making an economic profit. In the long run, the demand for Austin's watches OA. decreases; incurs an economic loss OB. increases; makes zero economic profit C. increases, increases his economic profit D. decreases; makes zero economic profit OE. decreases; shuts down and in long-run equilibrium, Austin MIER Price (dollars per watch) 200 160 120 80 40 0 Quantity (watches per month) 0 40 80 120 160 200
The figure below depicts the market supply and demand for the perfectly competitive rollerblade industry. S Price per pair of Rollerblades 1,140 070 50 150 Number of pairs of Rollerblades per week Based on the figure above, if the current quantity demanded of rollerblades is 150 per week, you accurately predict that in the short run, Q Select one: a. price and quantity supplied will increase and quantity demanded will decrease. b. price and quantity supplied will decrease and quantity demanded will increase. c. price, quantity supplied and quantity demanded will increase. d. price, quantity supplied and quantity demanded will decrease.
Use the data from the following demand schedule to answer the questions that follow. Price (P) (Dollars) Quantity Demanded (Q) Total Revenue (TR) (Dollars) Marginal Revenue (MR) (Dollars) 24.00 0 0.00 21.60 21.60 1 21.60 16.80 19.20 2 38.40 12.00 16.80 3 50.40 7.20 14.40 4 57.60 2.40 12.00 5 60.00 -2.40 9.60 6 57.60 -7.20 7.20 7 50.40 -12.00 4.80 8 38.40 -16.80 2.40 9 21.60 -21.60 0.00 10 0.00 Make the unrealistic assumption that production is costless for the monopolist in this question. The monopolist will charge a price of $ for the monopolist. per unit and sell units. This will yield an economic profit of $ Now assume the marginal cost is above zero and is equal to the marginal revenue of the fourth unit. The monopolist will now charge monopolist will now earn price and produce when production was costless. In turn, the economic profit compared to when production was costless. Grade It Now Save & Continue
A friend has just started up her own business. Her firm asks you how much to charge for her product to maximize profits. The demand schedule for it is given by the first two columns in the table below; its total costs are given in the third column. For each level of output, you can calculate total revenue, marginal revenue, average cost, and marginal cost. The profit-maximizing level of output can be found at the point where TR - TC is greatest, or where MR = MC, (or the last quantity where MR is still greater than MC.) What is the profit-maximizing level of output for her product? 40 How much will she earn in profits? 80 Price Quantity TC TR? MR? MC? $25.00 0 $130 $24.00 10 $275 $23.00 20 $435 $22.50 30 $610 $22.00 40 $800 $21.60 50 $1,005 $21.20 60 $1,225
The figure below shows the industry demand curve and two possible industry supply curves in the perfectly competitive market for cheeseburgers. Price ($) 8 7 6 51 3 2 1 0 3 5 6 B S₂ A S₁ Select one: ● a. an excess supply of 6 cheeseburgers. b. an excess demand of 4 cheeseburgers. O c. an excess supply of 3 cheeseburgers. d. an excess demand of 6 cheeseburgers. 7 8 Cheeseburgers The market depicted in the figure above is initially at equilibrium at Point A. Suppose firms begin to exit the market, causing the supply curve to shift from S₁ to S₂. 9 10 11 12 Q If the price of cheeseburgers remains constant at $5.00, as a result of the decrease in supply there will be