3. Throckmorton's room overlooks, from some distance, a major league baseball stadium. He decides to rent a telescope for $50.00 a week and charge his friends and classmates to use it to peep at the game for 30 seconds. He can act as a single-price monopolist for renting out "peeps." For each person who takes a 30-second peep, it costs Throckmorton $0.20 to clean the eyepiece. The accompanying table shows the information Throckmorton has gathered about the demand for the service in a given week. Price of Peep Quantity of Peeps Demanded 0 100 150 200 250 300 350 400 450 1.20 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 500 550 (a) For each price in the table, calculate the total revenue from selling peeps and the marginal revenue per peep. (Note: here it's MR per peep, rather than per 50 peeps) (b) At what quantity will Throckmorton's profit be maximized? What price will he charge? What will his total profit be? (c) Throckmorton's landlady complains about all the visitors coming into the building and tells him to stop selling peeps. But, if he pays her $0.20 for every peep he sells, she won't complain. What effect does the $0.20-per-peep bribe have on Throckmorton's marginal cost per peep? What is the new profit-maximizing quantity of peeps? What effect does the $0.20-per-peep bribe have on Throckmorton's total profit?
3. Throckmorton's room overlooks, from some distance, a major league baseball stadium. He decides to rent a telescope for $50.00 a week and charge his friends and classmates to use it to peep at the game for 30 seconds. He can act as a single-price monopolist for renting out "peeps." For each person who takes a 30-second peep, it costs Throckmorton $0.20 to clean the eyepiece. The accompanying table shows the information Throckmorton has gathered about the demand for the service in a given week. Price of Peep Quantity of Peeps Demanded 0 100 150 200 250 300 350 400 450 1.20 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 500 550 (a) For each price in the table, calculate the total revenue from selling peeps and the marginal revenue per peep. (Note: here it's MR per peep, rather than per 50 peeps) (b) At what quantity will Throckmorton's profit be maximized? What price will he charge? What will his total profit be? (c) Throckmorton's landlady complains about all the visitors coming into the building and tells him to stop selling peeps. But, if he pays her $0.20 for every peep he sells, she won't complain. What effect does the $0.20-per-peep bribe have on Throckmorton's marginal cost per peep? What is the new profit-maximizing quantity of peeps? What effect does the $0.20-per-peep bribe have on Throckmorton's total profit?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Please solve all subparts.
Transcribed Image Text:3. Throckmorton's room overlooks, from some distance, a major league baseball stadium. He decides
to rent a telescope for $50.00 a week and charge his friends and classmates to use it to peep at
the game for 30 seconds. He can act as a single-price monopolist for renting out "peeps." For
each person who takes a 30-second peep, it costs Throckmorton $0.20 to clean the eyepiece. The
accompanying table shows the information Throckmorton has gathered about the demand for the
service in a given week.
Price of Peep Quantity of Peeps
Demanded
0
100
150
200
250
300
350
400
450
1.20
1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
500
550
(a) For each price in the table, calculate the total revenue from selling peeps and the marginal
revenue per peep. (Note: here it's MR per peep, rather than per 50 peeps)
(b) At what quantity will Throckmorton's profit be maximized? What price will he charge? What
will his total profit be?
(c) Throckmorton's landlady complains about all the visitors coming into the building and tells
him to stop selling peeps. But, if he pays her $0.20 for every peep he sells, she won't complain.
What effect does the $0.20-per-peep bribe have on Throckmorton's marginal cost per peep?
What is the new profit-maximizing quantity of peeps? What effect does the $0.20-per-peep
bribe have on Throckmorton's total profit?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education