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Rod N. Reel owns a dealership that sells fishing boats in an open price-searcher market. To develop his pricing strategy, Rod hired an economist to estimate his demand curve. The first two columns of the chart provide the data for the expected weekly quantity demanded for Rod's fishing boats at alternative prices. Rod's marginal (and average) cost of supplying each boat is constant at $7,000 per boat, no matter how many boats he sells per week in this range. This cost includes all opportunity costs and represents the economic cost per boat. Complete the following table by finding the total revenue and total cost per week at each quantity, the marginal revenue and marginal cost from the sale of each additional boat, and the economic profit per week at each quantity. Price of Fishing Boats $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 Fishing Boats Sold (Boats per Week) 0 1 2 3 4 5 True Total Revenue ($ per week) $ $ $ $ $ If Rod wants to maximize his profits, he should charge a price of profit-maximizing price. At this price and sales volume, Rod's profits per week will be $ $0 Marginal Revenue ($ per week) $ $ $ $ $ Total Cost ($ per Week) $ $ $ $ $ $0 Marginal Cost ($ per Week) $7,000 $7,000 $7,000 $7,000 $7,000 Economic Profit ($ per Week) $ $ $ $ $ per boat. At this price, Rod will sell boats per week at the $0 True or False: At the price and sales level where profits are maximized, Rod has sold all boats that have higher marginal revenue than marginal cost.

Rod N. Reel owns a dealership that sells fishing boats in an open price-searcher market. To develop his pricing strategy, Rod hired an economist to estimate his demand curve. The first two columns of the chart provide the data for the expected weekly quantity demanded for Rod's fishing boats at alternative prices. Rod's marginal (and average) cost of supplying each boat is constant at $7,000 per boat, no matter how many boats he sells per week in this range. This cost includes all opportunity costs and represents the economic cost per boat. Complete the following table by finding the total revenue and total cost per week at each quantity, the marginal revenue and marginal cost from the sale of each additional boat, and the economic profit per week at each quantity. Price of Fishing Boats $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 Fishing Boats Sold (Boats per Week) 0 1 2 3 4 5 True Total Revenue ($ per week) $ $ $ $ $ If Rod wants to maximize his profits, he should charge a price of profit-maximizing price. At this price and sales volume, Rod's profits per week will be $ $0 Marginal Revenue ($ per week) $ $ $ $ $ Total Cost ($ per Week) $ $ $ $ $ $0 Marginal Cost ($ per Week) $7,000 $7,000 $7,000 $7,000 $7,000 Economic Profit ($ per Week) $ $ $ $ $ per boat. At this price, Rod will sell boats per week at the $0 True or False: At the price and sales level where profits are maximized, Rod has sold all boats that have higher marginal revenue than marginal cost.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Rod N. Reel owns a dealership that sells fishing boats in an open price-searcher market. To develop his pricing strategy, Rod hired an economist to estimate his demand curve. The first two columns of the chart provide the data for the expected weekly quantity demanded for Rod's fishing boats at alternative prices. Rod's marginal (and average) cost of supplying each boat is constant at $7,000 per boat, no matter how many boats he sells per week in this range. This cost includes all opportunity costs and represents the economic cost per boat. Complete the following table by finding the total revenue and total cost per week at each quantity, the marginal revenue and marginal cost from the sale of each additional boat, and the economic profit per week at each quantity. Price of Fishing Boats $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 Fishing Boats Sold (Boats per Week) 0 1 2 3 4 5 True Total Revenue ($ per Week) $ $ $ $ $ If Rod wants to maximize his profits, he should charge a price of profit-maximizing price. At this price and sales volume, Rod's profits per week will be $ $0 Marginal Revenue ($ per Week) AAAAA $ $ $ $ $ Total Cost ($ per Week) $ $ $ $ $ $0 Marginal Cost ($ per week) per boat. At this price, Rod will sell $7,000 $7,000 $7,000 $7,000 $7,000 Economic Profit ($ per Week) $ $ $ $ $ boats per week at the $0 True or False: At the price and sales level where profits are maximized, Rod has sold all boats that have higher marginal revenue than marginal cost.
Transcribed Image Text:Rod N. Reel owns a dealership that sells fishing boats in an open price-searcher market. To develop his pricing strategy, Rod hired an economist to estimate his demand curve. The first two columns of the chart provide the data for the expected weekly quantity demanded for Rod's fishing boats at alternative prices. Rod's marginal (and average) cost of supplying each boat is constant at $7,000 per boat, no matter how many boats he sells per week in this range. This cost includes all opportunity costs and represents the economic cost per boat. Complete the following table by finding the total revenue and total cost per week at each quantity, the marginal revenue and marginal cost from the sale of each additional boat, and the economic profit per week at each quantity. Price of Fishing Boats $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 Fishing Boats Sold (Boats per Week) 0 1 2 3 4 5 True Total Revenue ($ per Week) $ $ $ $ $ If Rod wants to maximize his profits, he should charge a price of profit-maximizing price. At this price and sales volume, Rod's profits per week will be $ $0 Marginal Revenue ($ per Week) AAAAA $ $ $ $ $ Total Cost ($ per Week) $ $ $ $ $ $0 Marginal Cost ($ per week) per boat. At this price, Rod will sell $7,000 $7,000 $7,000 $7,000 $7,000 Economic Profit ($ per Week) $ $ $ $ $ boats per week at the $0 True or False: At the price and sales level where profits are maximized, Rod has sold all boats that have higher marginal revenue than marginal cost.
$5,000 $4,000 If Rod wants to maximize his profits, he should charge a price of profit-maximizing price. 4 5 At this price and sales volume, Rod's profits per week will be $ True $ $ False These profits will induce firms to Rod's profits are typical of all firms in the boat sales business. MA $ True or False: At the price and sales level where profits are maximized, Rod has sold all boats that have higher marginal revenue than marginal cost. As Rod lowers his price from $9,000 to $5,000 his total revenues keep prices. the industry until economic profits are eliminated. When Rod lowers his price from $5,000 to $4,000, his total revenue prices. per boat. At this price, Rod will sell $ Recall the relationship between elasticity of demand, price changes, and their impact on total revenues. Thus, demand is . $7,000 $7,000 Thus, demand is $ $ boats per week at the over this range of between these two
Transcribed Image Text:$5,000 $4,000 If Rod wants to maximize his profits, he should charge a price of profit-maximizing price. 4 5 At this price and sales volume, Rod's profits per week will be $ True $ $ False These profits will induce firms to Rod's profits are typical of all firms in the boat sales business. MA $ True or False: At the price and sales level where profits are maximized, Rod has sold all boats that have higher marginal revenue than marginal cost. As Rod lowers his price from $9,000 to $5,000 his total revenues keep prices. the industry until economic profits are eliminated. When Rod lowers his price from $5,000 to $4,000, his total revenue prices. per boat. At this price, Rod will sell $ Recall the relationship between elasticity of demand, price changes, and their impact on total revenues. Thus, demand is . $7,000 $7,000 Thus, demand is $ $ boats per week at the over this range of between these two
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