5. In a small college town there is only one movie theater. In a given month, if the theater is open, the owners have to pay a fixed amount of $6,000 for the films, ushers, etc., regardless of how many people come to the movies. For simplicity, assume that if the theater is closed, its costs are zero. The demand function for movie tickets in the town is characterized by??= 45 −QT/60a. Draw the market demand curve, the marginal revenue curve, and the marginal cost curve. Make sure to label the axes, curves, and intercepts.b. Find the profit-maximizing price and quantity of movie tickets, and indicate them on the graph above. How much would the theater make in profits?c. Suppose the local government implements a property tax, so that each month the theater now must pay a lump sum tax of $700. What will be the price and quantity of movie tickets under this tax? 5. In a small college town there is only one movie theater. In a given month, if thetheater is open, the owners have to pay a fixed amount of $6,000 for the films,ushers, etc., regardless of how many people come to the movies. For simplicity,assume that if the theater is closed, its costs are zero. The demand function for movietickets in the town is characterized by Pr = 4560a On the axes below, draw the market demand curve, the marginal revenuecurve, and the marginal cost curve. Make sure to label the axes, curves, andintercepts.b. Find the profit-maximizing price and quantity of movie tickets, andindicate them on the graph above. How much would the theater make inprofits?c. Suppose the local government implements a property tax, so that eachmonth the theater now must pay a lump sum tax of $700. What will bethe price and quantity of movie tickets under this tax?

A monopoly market is a type of market structure in which a single seller or producer controls the…

Answered: 5. In a small college town there is…

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

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5. In a small college town there is only one movie theater. In a given month, if the theater is open, the owners have to pay a fixed amount of $6,000 for the films, ushers, etc., regardless of how many people come to the movies. For simplicity, assume that if the theater is closed, its costs are zero. The demand function for movie tickets in the town is characterized by

??= 45 −QT/60

a. Draw the market demand curve, the marginal revenue curve, and the marginal cost curve. Make sure to label the axes, curves, and intercepts.

b. Find the profit-maximizing price and quantity of movie tickets, and indicate them on the graph above. How much would the theater make in profits?
c. Suppose the local government implements a property tax, so that each month the theater now must pay a lump sum tax of $700. What will be the price and quantity of movie tickets under this tax?

5. In a small college town there is only one movie theater. In a given month, if the
theater is open, the owners have to pay a fixed amount of $6,000 for the films,
ushers, etc., regardless of how many people come to the movies. For simplicity,
assume that if the theater is closed, its costs are zero. The demand function for movie
tickets in the town is characterized by Pr = 45
60
a On the axes below, draw the market demand curve, the marginal revenue
curve, and the marginal cost curve. Make sure to label the axes, curves, and
intercepts.
b. Find the profit-maximizing price and quantity of movie tickets, and
indicate them on the graph above. How much would the theater make in
profits?
c. Suppose the local government implements a property tax, so that each
month the theater now must pay a lump sum tax of $700. What will be
the price and quantity of movie tickets under this tax?

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If there is no lump-sum tax, what is the deadweight loss caused by the monopoly? Indicate on the graph.

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