Happy Go Lucky Electric Company is the only company providing electric service to the city of Go Lucky. Demonstrate the five steps to maximizing profit by moving points A, B, C, and D according to the instructions. Place point A on the marginal cost curve where marginal cost equals marginal revenue. Place point B on the x-axis at the output level associated with point A. Place point C on the average total cost curve at that output level. Place point D on the demand curve at that output level.
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![Happy Go Lucky Electric Company is the only company providing electric service to the city of Go Lucky. Demonstrate the five
steps to maximizing profit by moving points A, B, C, and D according to the instructions.
Place point A on the marginal cost curve where marginal cost equals marginal revenue.
Place point B on the x-axis at the output level associated with point A.
Place point C on the average total cost curve at that output level.
Place point D on the demand curve at that output level.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc837a889-a6d4-46b9-a4e5-2f62ad8aee7c%2Fefb26818-f919-49e6-8ca8-208fcee6dea1%2Fw5bmsrr_processed.jpeg&w=3840&q=75)
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- The table below depicts the prices and total costs a local used-book store faces. The bookstore competes with a number of similar stores, but it capitalizes on its location and the word-of-mouth reputation of the coffee it serves to its customers. Calculate the store's total revenue, total profit, marginal revenue, and marginal cost at each level of output, beginning with the first unit (Enter all values rounded to the nearest penny.) Total Price per Book (S) Costs ($) Total Total Marginal Revenue (S) Marginal Cost ($) Revenue ($) Profit (S) - 4 Output 5.75 4.00 1 5.50 7.25 5.5 - 1.75 5.5 3.25 2 5.25 9.50 10.5 1 2.25 3 5.00 11.60 15 3.4 4.5 2.1 4 4.75 14.10 19 4.9 4 25 4.50 17.60 22.5 4.9 3.5 3.5 6 4.25 21.75 25.5 3.75 3 4.15 7 4.00 26.50 28 1.5 2.5 4.75 Based on marginal analysis, what is the approximate profit-maximizing level of output for this business?Joyce owns a gas station and monopolizes gas sales along a remote stretch of road. In February, Joyce stayed open even though she earned negative economic profits. Draw a correctly labeled graph for Joyce’s gas station during February and show each of the following. The profit-maximizing output and price, labeled QJ and PJ The average total cost curve, labeled ATC Deadweight loss, completely shaded What must have been true for Joyce to continue operating during the month of February even though she earned negative economic profit? Assume that fixed costs for Joyce’s gas station decrease. Would Joyce’s profit-maximizing quantity increase, decrease, or stay the same in February? Explain. During the month of July, demand increases so that Joyce now earns a positive economic profit. However, she realizes her profits would have been higher if she had reduced the price of gasoline. At the quantity sold in July, was marginal revenue greater than, equal to, or less than…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 $1,225
- The table below depicts the prices and total costs a local used-book store faces. The bookstore competes with a number of similar stores, but it capitalizes on its location and the word-of-mouth reputation of the coffee it serves to its customers. Calculate the store's total revenue, total profit, marginal revenue, and marginal cost at each level of output, beginning with the first unit (Enter all values rounded to the nearest penny.) Marginal Revenue (S) Marginal Cost ($) Price per Total Total Total Output Book (S) Costs ($) Revenue ($) Profit (S) 5.75 4.00 1 5.50 7.25 5 25 9.50 3 5.00 11.60 4 4.75 14.10 4.50 17.60 6. 4.25 21.75 7 4.00 26.50 OOOON O OOOOD O OOODD OODA company is the sole producer of holographic TVs. The daily demand for these TVs is Q=10,200 - 100P, where Q is the quantity demanded and P is the price. The cost of producing the TVs is (note that this implies that marginal cost is equal to Q, MC = Q). What is the company’s total revenue schedule? What is the company’s marginal revenue schedule? What is the profit maximising number of TVs that the company must produce each day? What price should it charge per TV? What is the daily profit?Suppose Razor is the only pharmaceutical firm that sells a flu vaccine in an economy. It faces the following demand, marginal revenue, marginal cost and total cost functions. P = 70 – Q MR = 70 – 2Q MC = 10 + Q Demand: Marginal revenue: Marginal cost: Total cost: TC = 20 + 10Q + 2 Find the profit maximizing output and the price of the vaccine for the firm. Show your steps. а. b. Derive the average cost function. Show your workings. Use the result of part a and b, find the profit level of the firm. Show your workings. с. d. Suppose the government is considering a price ceiling 10 percent below the price derived in part a. I. Suggest one reason for the imposition of the price ceiling. II. i) With the price ceiling, what is the price for the vaccine? ii) Given the price in part i, how many vaccines will be purchased in the vaccine market? With the price ceiling, is there any shortage in the vaccine market? Explain your answer. iii)
- Consider the following demand schedule for Rainbow Looms. Assume that the marginal cost of producing a Rainbow Loom is a constant $2.50. Note that when marginal cost is constant, average cost is constant. Fixed costs are assumed to be zero. Price($/Rainbow Loom)Quantity Demanded (Rainbow Loom )$17.500$15.0012$12.5042$10.0036$7.5048$5.0060b. Recall that a monopoly facing this demand schedule would produce 36 Rainbow Looms. If instead of a monopoly, a two-firm cartel controlled the Rainbow Loom market, how many Rainbow Looms would each firm want to produce in order to maximize industry profits?Each firm would produce. Rainbow Loomsc. Calculate each firm's profits if each firm produces output at the level you calculated in part b. Firm profits: $ Now suppose one firm decides to break from the cartel and produce 12 more units of output than what you calculated in part b. What are the deviating firm's profits now? What about the profits of the "cooperating" firm whose production levels stay…DuopolyMarket for mechanical pencils can be described by the following demand schedule:Price | Number of pencils demanded$6 | 80$5 | 200$4 | 320$3 | 440$2 | 560$1 | 680$0 | 800The fixed cost is $340, while the variable cost is $0.50.a) For each price, find the total revenue, the total cost, and the profit.b) If the market was under perfect competition, what would be the price and the quantity ofpencils traded in the long run? Why?c) If there was only one seller on the market, what would be the price and the quantity ofpencils traded? Why?Total Revenue $5,000 per Week $2,600 per Week $2,400 per Week Total Variable Cost Total Fixed Cost Let us suppose Harry's, a local supplier of chill and pizza, has the revenue and cost structure shown here. Multiple Choice Harry's should stay open in the short run. Harry's should shut down in the long run. Harry's should shut down in the short run. Harry's should stay open in the short run but shut down in the long run.
- DuopolyMarket for mechanical pencils can be described by the following demand schedule:Price | Number of pencils demanded$6 | 80$5 | 200$4 | 320$3 | 440$2 | 560$1 | 680$0 | 800The fixed cost is $340, while the variable cost is $0.50.a) For each price, find the total revenue, the total cost, and the profit.b) If the market was under perfect competition, what would be the price and the quantity ofpencils traded in the long run? Why?c) If there was only one seller on the market, what would be the price and the quantity ofpencils traded? Why?d) If there were two firms on the market and they agreed to cooperate, how much would eachfirm need to produce? Follow the procedure outlined in the lecture and show that the otherfirm would prefer to deviate from the agreement.e) When the firms deviate from the agreement, there is a new optimal level of output. Showwhether the firms have an incentive to deviate from that level?f) If there were two firms on the market, what would be the price and the…Suppose that the chemical lab could use a different production method that involves recycling water. This would reduce the pollution in the lake to levels safe for recreation, and the boat tour would no longer be affected. If the chemical lab uses the recycling method, then the chemical lab's economic profit is $1,600 per week, and the boat tour's economic profit is $2,600 per week. If the chemical lab does not use the recycling method then the chemical lab's economic profit is $2,300 per week, and the boat tour's economic profit is $1,400 per week. These figures are summarize the following table. Complete the following table by computing the total profit (the chemical lab's economic profit and the boat tour's economic profit combined) with and without recycling. Action Chemical Lab (Dollars) Profit Boat Tour Total (Dollars) (Dollars) No Recycling Recycling 2,300 1,400 1,600 2,600 Total economic profit is highest when the recycling production method is When the chemical lab uses the…Ecotripper Enterprises is the sole producer of Sunblast solar-powered skateboards, “The green alternative”. Market demand for Sunblasts is given by the formula: P=120-0.5Q, where p is in $ per skateboard and Q in skateboards per week. Total costs, in $ per week, are given by: TC=100+20Q, and marginal cost (MC) equal 20. a.) Derive the marginal revenue function and calculate the profit-maximizing price, quantity sold and the profit. b.) If the government imposes a price ceiling of $ 65 per skateboard, what is the effect on the equilibrium and the values derived in a.)? c.) If the government wanted Ecotripper to produce the socially efficient quantity of skateboards, what price ceiling could it set in the short run? What would the result be in the long run? d.) If the government decided to set the price ceiling so that consumer surplus was maximized subject to Ecotripper earning zero profits, what would be the level of the price ceiling, the quantity sold and the consumer surplus?
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