Juan's demand for ice cream from the Ice Cream Monopoly Company is illustrated in the figure below. $ per cone 3.00 2.75 2.50 2.25 2.00 1.75 1.50 1.25 1.00 0.75 0.50 0.25 0.00 0 Juan's Demand for Ice Cream Profit = $ 3 8 Ice Cream Cones 9 Demand 10 11 12 The marginal cost of producing ice cream cones is $0.50. Suppose the Ice Cream Monopoly Company sells to Juan using a two-part tariff with a per-cone price of $0.50. Instructions: Round your answers to 2 decimal places as needed. a. What is the largest fixed fee it can charge Juan and still persuade Juan to make a purchase? b. How does its total revenue from Juan under this two-part tariff compare to its total revenue from Juan when it sells Juan 8 ice cream cones, each priced at Juan's willingness to pay for it (on a cone-per-cone basis)? Under this two-part tariff, what is its total profit from Juan? TR= $

Juan's demand for ice cream from the Ice Cream Monopoly Company is illustrated in the figure below. $ per cone 3.00 2.75 2.50 2.25 2.00 1.75 1.50 1.25 1.00 0.75 0.50 0.25 0.00 0 Juan's Demand for Ice Cream Profit = $ 3 8 Ice Cream Cones 9 Demand 10 11 12 The marginal cost of producing ice cream cones is $0.50. Suppose the Ice Cream Monopoly Company sells to Juan using a two-part tariff with a per-cone price of $0.50. Instructions: Round your answers to 2 decimal places as needed. a. What is the largest fixed fee it can charge Juan and still persuade Juan to make a purchase? b. How does its total revenue from Juan under this two-part tariff compare to its total revenue from Juan when it sells Juan 8 ice cream cones, each priced at Juan's willingness to pay for it (on a cone-per-cone basis)? Under this two-part tariff, what is its total profit from Juan? TR= $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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