Imagine that you run the toll authority for a city bridge. You must charge all of your customers the exact same toll. Initially, you have set the price at$7 per trip. The blue line on the following graph shows the daily demand curve for trips across the city bridge.On the following graph, use the purple rectangle (diamond symbols) to shade the area representing the total daily revenue when the toll is $7 on thegraph. Notice that when you click on the rectangle, the area is displayed.TOLL (Dollars per vehicle)1098742100Demand10 20 30 40 50 60 70 80QUANTITY (Thousands of vehicles per day)90When the toll is $7, total revenue is $100TR at $7TR at $8An advisor has suggested that if you raise the toll to $8, the toll authority would bring in more revenue. To analyze this, use the green rectangle(triangle symbols) to shade the area representing the total daily revenue when the toll is $8 on the graph.thousand per day, but when the toll is $8, total revenue is $Based on your analysis, you can conclude that your advisor is$7 to $8, because the demand for trips across the bridge for prices between $7 and $8 isthousand per day.in suggesting that total revenue would rise if you increase the toll from

When the toll is $7, the total revenue is $210 thousand per day, but when the toll is $8, the total…

Answered: Imagine that you run the toll authority…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The following graph plots the supply and demand curves in the market for VR headsets. Use the black point (plus symbol) to indicate the equilibrium price and quantity of VR headsets. Then use the green point (triangle symbol) to fill the area representing consumer surplus, and use the purple point (diamond symbol) to fill the area representing producer surplus. PRICE (Dollars per headset) 350 315 280 245 210 175 140 105 70 35 0 0 Demand Supply 40 80 120 160 200 240 280 320 360 QUANTITY (Millions of headsets) Total surplus in this market is $ 400 million. + Equilibrium A Consumer Surplus Producer Surplus ?
The following graph plots the market for electric guitars in Houston, where there are always over 1,000 music stores. Suppose a new article is published claiming that Houston has abnormally high levels of pollution compared to the rest of the region. Due to air quality concerns, a significant number of families move out of the city. Show the effect of this change on the market for electric guitars by shifting one or both of the curves on the following graph, holding all else constant. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. DemandSupplyPRICE (Dollars per guitar)QUANTITY (Guitars)Demand Supply Now suppose Congress passes a new tax that decreases the income of Houston residents. If electric guitars are a normal good, this will cause the demand for electric guitars to .
Example 2: In fall of 2011, the National Christmas Tree Association decided to impose a fee/tax of $0.15 per tree sold.² They claimed the tax revenue raised would fund a new marketing campaign for Christmas tree growers in response to growing plastic tree imports. The proposal quickly drew controversy: some argued that the fee/tax would be passed along in higher prices to consumers, but the National Christmas Tree Association says no. How does the answer to this question depend on the assumption about the price elasticity of demand? a. Consider two graphs of the market for Christmas trees. The supply curve in each market is assumed to be the same. In the left graph, assume the price elasticity of demand is relatively inelastic and in the right graph, assume the price elasticity of demand is relatively elastic. Add labels on your diagram to identify the equilibrium price and quantity of trees before the tax. b. Now, suppose retailers are assessed a tax of amount for each tree sold.…
. UT Sports, a store that sells various types of sports clothing and other sports items, is planning to introduce a new design of World Cup Kits. A consultant has estimated the demand curve to be Q= 8400 – 420 P Where Q is cap sales and P is price. How many KITs could UT sell at $25.2 each? How much would the price have to be to sell 7,560 KITs? Suppose UT were to use the KITs as a promotion. How many KITs could UT give away free? At what price would no KITs be sold? Calculate the point price elasticity of demand at a price of $ 25.2.
12. The Vanier Cup, the finals of Canadian University football, was held on November 26, 2016 at Tim Hortons Field in Hamilton, Ontario. The organizers learned a lot are already planning next year's event! Based on what they learned this year, they know that the demand function for tickets to the game will be given by q = 200, 000 - 10, 000p, where p is the price charged per ticket. The chief organizer for next year is an ambitious person who wants to set prices so as to maximize revenue. (b) Write down an expression for the inverse demand function (price as a function of quantity), total revenue (as a function of quantity), and marginal revenue (as a function of quantity). Find the quantity and price that generate maximum revenue. (c) Derive an expression for the elasticity of ticket demand with respect to price. (Hint: your elasticity should be a function of the price, p.) What is the value of the elasticity at the revenue-maximizing price (your answer for price from part b)?
The following graph plots the demand curve (blue line) for several consumers in the market for VR headsets in Mead, a small town located in Colorado. The Mead market price of a VR headset is given by the horizontal black line at $180. Each rectangle you can place on the following graph corresponds to a particular buyer in this market: orange (square symbols) for Jacques, green (triangle symbols) for Kyoko, purple (diamond symbols) for Musashi, tan (dash symbols) for Rina, and blue (circle symbols) for Sean. Use the rectangles to shade the areas representing consumer surplus for each person who is willing and able to purchase a VR headset at a market price of $180. (Note: If a person will not purchase a VR headset at the market price, indicate this by leaving his or her rectangle in its original position on the palette.) PRICE (Dollars per VR headset) 480 420 360 300 240 180 120 60 0 0 1 Jacques 2 Kyoko Musashi Rina Sean 3 4 5 QUANTITY (VR headsets) Market Price 6 7 8 Based on the…
The table below shows the weekly demand for machine screws at the local hardware store. Demand for Machine Screws Price (dollars per pack) $5.00 Quantity (packs of 100 screws) 4.50 25 4.00 85 3.50 145 3.00 205 2.50 2.00 265 325 385 445 1.50 1.00 0.50 505 0.00 565 Instructions: Round your answers to 2 decimal places. If you are entering a negative number include a minus sign. a. Using the starting point method, what is the price elasticity of demand from a price of $4.50 to a price of $4.00 per pack of 100 screws? b. Using the starting point method, what is the price elasticity of demand from a price of $2.50 to a price of $2.00 per pack of 100 screws? c. Using the starting point method, what is the price elasticity of demand from a price of $1.00 to a price of $0.50 per pack of 100 screws?
You own a hot dog stand that you set up outside the student union every day at lunch time. Currently, you are selling hot dogs for a price of $3, and you sell 30 hot dogs a day (point A on the diagram). You are considering cutting the price to $2. The graph shows two possible increases in the quantity sold as a result of your price cut. Use the information in the graph (new quantities are given on the horizontal axis) to calculate the price elasticity between these two prices on each of the demand curves. Use the midpoint formula to calculate the price elasticities. A On the demand curve containing the points "A" and "B", the price elasticity of demand for a price cut from $3 to $2 is|. (Hint: Include the negative sign and enter your response rounded to two decimal places.) D2 On the demand curve containing the points "A" and "C", the price elasticity of demand for a price cut from $3 to $2 is. (Hint: Include the negative sign and enter your response rounded to two decimal places.) :37…
The following graph input tool shows the daily demand for hotel rooms at the Peacock Hotel and Casino in Las Vegas, Nevada. To help the hotel management better understand the market, an economist identified three primary factors that affect the demand for rooms each night. These demand factors, along with the values corresponding to the initial demand curve, are shown in the following table and alongside the graph input tool. Demand Factor Initial Value Average American household income $40,000 per year Roundtrip airfare from New York (JFK) to Las Vegas (LAS) $200 per roundtrip $250 per night Room rate at the Grandiose Hotel and Casino, which is near the Peacock Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool (?) Market for Peacock's Hotel Rooms 500 Price 350…
Suppose a local bank increases the fees they charge for their bank accounts by 25 percent. In response, the demand for their bank accounts decreases from 15,000 to 5,000 . What is price elasticity of demand for this bank's accounts? Using the midpoint formula, the price elasticity of demand is (Enter your response rounded to two decimal places.)
The diagram to the right illustrates a hypothetical demand curve representing the relationship between price (in dollars per unit) and quantity (in 1,000s of units per unit of time). 100- 90- Total revenue is $ (Enter your response as an integer.) 80- 70- 60 60- 50- 40- 30- 20- 10- D 30 0- 10 20 30 40 50 60 70 80 90 100 Quantity (1,000s of units per unit of time) Price (dollars per unit)
The diagram below shows a demand line (green) and revenue curve (red) for a certain good. The horizontal axis is price in £. For the demand line, the vertical axis gives the number of units sold. For the revenue curve, the units of the vertical axis are £. Explain briefly how you can tell just by looking at the graphs that I must have gone wrong plotting the revenue curve, find the equation of the green line, the demand ? in terms of price, the correct equation of the revenue curve and the maximum revenue.

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