(Last Word) Starbucks should continue to add stores in a city Multiple Choice as long as the marginal benefit of opening a new location does not fall below the marginal cost. as long as the marginal cost of opening a new location does not fall below the marginal benefit. until all remaining competing coffee stores have left the market. as long as the gap between marginal benefits and marginal costs is growing.

(Last Word) Starbucks should continue to add stores in a city Multiple Choice as long as the marginal benefit of opening a new location does not fall below the marginal cost. as long as the marginal cost of opening a new location does not fall below the marginal benefit. until all remaining competing coffee stores have left the market. as long as the gap between marginal benefits and marginal costs is growing.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: Monopolistic Competition

Section: Chapter Questions

Problem 8PA

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The following graph shows the daily demand curve for bippitybops in Denver. Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve. Note: You will not be graded on any changes made to this graph. PRICE (Dollars per bippitybop) 240 220 200 180 160 140 120 100 80 8 60 40 20 0 mớ H + 0 9 18 27 36 45 54 63 72 81 QUANTITY (Bippitybops per day) * Demand 90 B 99 108 Total Revenue (?)
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2. The gains and loss from selling one more unit Sean's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Sean produced seven fire engines, but he has decided to increase production to eight fire engines. The following graph shows the demand curve Sean faces. As you can see, to sell the additional engine, Sean must lower his price from $100,000 to $50,000 per fire engine. Note that although Sean gains revenue from the additional engine he sells, he also loses revenue from the initial seven engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial seven engines by selling at $50,000 rather than $100,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $50,000.
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3. A local firm produces three types of pizza, for delivery to homes in the area. The owners have completed research, to discover the demand curves for each of the three pizzas. The schedules are shown below: (Quantities are per week). Price Pizza A (Qd) Pizza B (Qd) Pizza C (Qd) 12 800 100 11 840 200 10 880 400 300 9. 920 800 400 8 960 1200 500 1000 1600 600 1040 2000 700 1080 2400 800 Plot the three demand curves, on one graph. a) Calculate the Market demand for Pizza. b) Calculate Price Elasticity of Demand for all three pizzas over the price range £9 to £10. c) For pizza C only, what price must be charged if the firm wishes to maximize its sales revenue? II
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Kasey Puzzle, Inc. sells geography-based puzzles. Kasey currently sells 25,000 units a month for $40 each, has variable costs of $20 per unit, and fixed costs of $300,000. Kasey Puzzle is considering increasing the price of its units to $60 per unit. This will not affect costs, but demand is expected to drop 20%. Should Kasey Puzzle increase the price of its product? с Multiple Choice O O Yes, profit will increase $500,000. No, profit will decrease $500,000. No, profit will decrease $300,000. Yes; profit will increase $300,000.
Suppose that the manager of a donut shop tellsyou that he sold 220 donuts today, for a total revenue of $220 and average revenue of $0.90. What’swrong with this story?
1. You are running a (small) chain of gourmet burger joints with two locations (San Antonio and Laredo) You have been charging $10 for your burger meal (fries, burger and soft drink). Across both locations, you sell 2400 meals per week at this price. When you raised the price to $13 for the burger meal, your sales across the two locations fell to 1800 meals per week. For your costs, you have fixed costs of $3000 per week across the two locations. In addition, it costs you six dollars per burger in variable costs (ingredients, labor etc.) A. What is your combined cost function across the two locations? B. Using the two prices above, estimate your combined demand function across the two locations? C. Using the combined demand function and cost function calculated above, calculate the profit-maximizing price and quantities? D. What are your (combined) weekly profits across the two locations?
4. If Stopdecay does not change its price, the average monthly total revenue would be (Dropdown options: 240k, 195k, 200k, 162,500) 5. On the other hand, if it changes the price to sell the same number of units as it did before, the average monthly total revenue would be (Dropdown options: 231,920 or 241,440, or 160,000 or 172,480)