In the late 1990s, Starbucks hired the Environmental Defense Fund to help it determine how best to reduce the amount of paper waste it was generating because of customers demanding two cups to hold the hot coffee. The Environmental Defense Fund determined that the best way to eliminate the need for the second cup was to provide customers with a paper sleeve that went around the outside of a cup. This innovation reduced the amount of paper cups being used by Starbucks by 50 percent, saved the company tens of thousands of dollars by reducing the amount of cups they needed, and improving their environmental image. This is an example of:

In the late 1990s, Starbucks hired the Environmental Defense Fund to help it determine how best to reduce the amount of paper waste it was generating because of customers demanding two cups to hold the hot coffee. The Environmental Defense Fund determined that the best way to eliminate the need for the second cup was to provide customers with a paper sleeve that went around the outside of a cup. This innovation reduced the amount of paper cups being used by Starbucks by 50 percent, saved the company tens of thousands of dollars by reducing the amount of cups they needed, and improving their environmental image. This is an example of:

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider a town in which only two residents, Hubert and Kate, own wells that produce water safe for drinking. Hubert and Kate can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water. Price Quantity Demanded Total Revenue (Dollars per gallon) (Gallons of water) (Dollars) 6.00 0 0 5.50 45 $247.50 5.00 90 $450.00 4.50 135 $607.50 4.00 180 $720.00 3.50 225 $787.50 3.00 270 $810.00 2.50 315 $787.50 2.00 360 $720.00 1.50 405 $607.50 1.00 450 $450.00 0.50 495 $247.50 0 540 0 Suppose Hubert and Kate form a cartel and behave as a monopolist. The profit-maximizing price is____per gallon, and the total output is_____gallons. As part of their cartel agreement, Hubert and Kate agree to split production equally. Therefore, Hubert's profit is _____, and Kate's profit is______. Suppose that Hubert and Kate have been successfully…
On the following graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity. Next, use the purple points (diamond symbol) to shade the profit, the green points (triangle symbol) to shade the consumer surplus, and the black points (plus symbol) to shade the deadweight loss in this market without price discrimination. (Note: If you decide that consumer surplus, profit, or deadweight loss equals zero, indicate this by leaving that element in its original position on the palette.) PRICE (Dollars per pair of Stompers) 100 90 80 70 60 50 40 30 20 10 0 0 + 80 MR Demand MC = ATC + 160 240 320 400 480 560 640 720 800 QUANTITY (Pairs of Stompers) Monopoly Outcome Δ Consumer Surplus Profit Deadweight Loss ?
Joe Smiley buys his mobile phone services from Sprint, the sole provider in his state of Wyoming. Sprint offers the following pricing plans: a fee of 10 dollars per month and 50 minutes of free calls per month or a fee of 20 dollars per month and 100 minutes of free calls. Under both plans the price of additional calls is 25 cents per minute.Joe Smiley's demand curve for mobile phone services is P=100 - 0.5Q where P is measured in cents/minute and Q is measured in minutes per month. a) suppose Joe Smiley subscribes to the first plan (10 dollar fee and 50 free minutes) (i) how much calling time would he consume? (ii) what would be his total benefit? What would be his surplus? b) suppose Joe Smiley subscribes to the second plan (20 dollar fee and 100 free minutes) (i) how much calling time would he consume? (ii) what would be his total benefit? What would be his surplus? c) which plan would Joe Smiley choose? He will choose plan (b) because it maximizes his surplus
The market for organic and locally sourced foods has skyrocketed over the past decade as consumers focus on improving their eating habits. However, severe droughts have caused organic food prices to rise significantly, forcing many consumers to shop at conventional supermarkets (which are increasingly adding organic food options) instead of organic food markets such as Whole Foods. In response, companies such as Whole Foods have begun offering more nonorganic options on their store shelves in order to provide their consumers with more affordable options. Based on this response, what did companies such as Whole Foods realize about the elasticity of demand for organic foods that caused them to lower their prices by changing the type of foods they sell?
Imagine you are the owner of the Omaha Surfboard Company. You have a branch in Omaha and in Long Beach CA. After some market research you find the following surfboard demand for each market, Omaha Demand: Qo = 1000 – 10P Long Beach Demand: QL = 1000 – 5P Combined/Total Demand: Q = 2000 – 15P Your marginal cost is constant at $40. a. Find your price and quantity if you treated the market as a single entity with a single price. What is your profit? (Hint: find Marginal Revenue and set equal to MC) b. If you treat each market separately, what is P and Quantity in each market, and final profit?
Jenny is going to rent a truck for one day. There are two companies she can choose from, and they have the following prices. Company A charges $90 and allows unlimited mileage. Company B has an initial fee of $55 and charges an additional $0.70 for every mile driven.
In 1996, Florida voted on (and rejected) a $0.01-per pound excise tax on refined cane sugar in the Florida Everglades Agricultural Area. Swinton and Thomas (2001) used linear supply and demand curves (based on elasticities estimated by Marks, 1993) to calculate the incidence from this tax given that the market is competitive. Their inverse demand curve was p=1.787 -0.0004641Q, and their inverse supply curve was -0.4896 + 0.00020165Q. p=- (Hint: The incidence that falls on consumers is the difference between the price with and without the tax divided by the tax.) Calculate the incidence of the tax that falls on consumers for a competitive market. The incidence that falls on consumers in a competitive market is 70.0 percent. (round your answer to one decimal place) If producers joined together to form a monopoly, and the supply curve is actually the monopoly's marginal cost curve, what is the incidence of the tax? The incidence that falls on consumers is percent. (round your answer to…
The graph below depicts the daily demand and supply for parking spaces. The demand curve is downward sloping as usual, but the supply curve is vertical because there are a fixed number of spaces available at any given time. If the university does not charge a price to park by the hour, the problem this causes is a ______. To resolve this problem the university could charge $ _______ per hour to park. Part 2. The diagram below is a more realistic depiction of the market for parking spaces at another university. Rather than a single demand curve, there are two demands depending on the time of day. Peak demand, Dpeak, occurs between 9am and 3pm, and off peak demand, Doffp, occurs the rest of the day. Suppose the university want to add enough spaces to eliminate the shortage. How many additional spaces would the university need to add? ______ spaces Part 3. Suppose the university does not have enough funds to provide any more spaces. In order to eliminate parking congestion,…
A medical device manufacturer sells its sterilization equipment in a market with an inverse demand curve of P = 6,000 – 400Q, %3D where Q is the number of sterilizers in thousands, and P is the price per unit. Suppose the Patient Protection and Affordable Care Act levies a tax on medical devices. Assume the tax raises the marginal cost of production from $4,000 to $4,400. After the tax, the profit- maximizing quantity by _- - -- - A. decreases; 1 B. decreases; 0.5 C. increases; 1 D. increases; 0.5
Consider that the retail market for sanitizing wipes in a small locale is described by the follow demand and supply equations respectively: P = 8.40 - 0.02Q and P = 6.60 + 0.01Q where P is the price in dollars and Q is the quantity measured in thousands per week. The market is currently in equilibrium. (Question 8 of 8) Now consider than an unexpected viral outbreak led to consumers ensuring that much more surfaces (counter tops, door handles, etc.) are clean and sanitized. At the same time, the government's demand for sanitizing wipes at various public institutions (hospitals, schools, etc.) has impacted the supply of sanitizing wipes in the retail market. Although the government is neither a buyer nor seller in the retail market, their requests for sanitizing wipes does affect how many sanitizing wipes firms are able to supply in the retail market. The market for sanitizing wipes adjusts afterwards and the market is in equilibrium. Suppose that after the market for sanitizing wipes…
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 $2 per trip. The blue line on the following graph shows the weekly 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 weekly revenue when the toll is $2 on the graph. Notice that when you click on the rectangle, the area is displayed. TOLL (Dollars per vehide) 10 9 8 Demand 3 2 1 0 0 4 8 12 16 20 24 28 32 QUANTITY (Thousands of vehicles per week) 36 When the toll is $2, total revenue is $ 40 TR at $2 TR at $3 (?) An advisor has suggested that if you raise the toll to $3, the toll authority would bring in more revenue. To analyze this, use the green rectangle (triangle symbols) to shade the area representing the total weekly revenue when the toll is $3 on the graph. per week, but when the toll is $3, total revenue is $ per week.…
In his State of the Union address in 2003, President Bush supported the idea of changing from the use of internal combustion engines to fuel cells based on hydrogen as a way of reducing air pollution and the emission of greenhouse gases. Fuel cells are nonpolluting because they only emit water vapor. President Bush proposed having the government subsidize research and development of hydrogen fuel and fuel cell technology. The president did not propose raising taxes on gasoline as a way of encouraging the use of fuel cells and reducing greenhouse gases. Currently, hydrogen is more expensive than gasoline. Would an increase in the tax on gasoline encourage the development of hydrogen-based fuel cell technology for automobiles?