The above figure represents the market for cable television in Oakland, Florida. Time Warner Communications (TWC) is the sole provider of cable television to the residents of this Central Florida community. If TWC operated under an average cost pricing rule, how many households in Oakland are served? 20,000 30,000 10,000 40,000
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- Promoters of a major college basketball tournament estimate that the demand for tickets by adults is QA = 5,000 - 10P and the demand for tickets by students is QS = 10,000 - 100P. The marginal cost and average total cost of seating an additional spectator is constant, MC = $10, The promoters want to segment the market and charge adults and students different prices. What is the profit maximizing ticket price for students?[Suppose] A Cmpany is the sole provider of electricity in the various districts of Dubai. To meet the monthly demand for electricity in these districts, which is given by the inverse demand function: P = 1,200 − 4Q, the company has set up two electric generating facilities: Q1 kilowatts are produced at facility 1 and Q2 kilowatts are produced at facility 2; where Q = Q1 + Q2. The costs of producing electricity at each facility are given by C1(Q1) = 8,000 + 6Q1 C2(Q2) = 6,000 + 3Q2 + 5Q22 Calculate the profit maximizing output levels of each factory? What is the profit maximizing level of price? What is the maximum profit?Big Boss is a local pet shop, mainly selling cat food. It has a constant marginal cost of $24. She recently runs a promotional campaign using discount coupons. Suppose Big Boss estimates price elasticity of demand for coupon users and non-coupon users are –3.0 and –1.6 respectively. Calculate the prices Big Boss should charge on coupon users and non-coupon users respectively.
- Blue INK is the only cabel service provider in Gazipur. The diagram below depicts the price, output and costs incurred by Blue INK. Use the graph to answer the following questions: 1. What is the Total revenue generated by Blue INK at the profit maximizing level of output? 2. If the Cable Service Market turns into a Perfectly Competitive Market, what will be the total ammount of the service provided? 3. If the market turns into a Monopoly market again, what will be the total deadweight loss created?Imagine that the cell-phone market is made up of one large firm that leads the industry and sets its own price first, while smaller firms in the industry follow. There are 20 such smaller firms, each with a supply function of q; = 67.50 + for i = 1,2, ..., 20 firms, while pis the per-unit price. Total market demand for cell phones is given by the function Q = 6, 700.00 – p. If the cost function for the leading firm is CL(qL) = 109L, calculate the following values: %3D Leading firm's production: q1 = (Round to two decimals if necessary.) Total follower firm production: qF = (Round to two decimals if necessary.) Equilibrium price: p = $ (Round to two decimals if necessary.)A new restaurant - Uovo - has just opened in West L.A. It is serving the upscale market, with truly outstanding pasta that is flown in overnight from Bologna, Italy. Uovo offers a fixed-price menu with an appetizer, three dishes of pasta, and a delicious tiramisu for dessert. The restaurant faces the following demand function: Q = 500 - 4P where Q is the number of guests per day. The marginal cost is constant at $45 per customer (including expenses for ingredients and personnel). The restaurant is paying a rent of $1,000 per day. What is the profit-maximizing number of guests that Uovo should serve each day, and what price should Uovo charge to maximize profit? What is the elasticity of demand at the optimal price and quantity? Is demand elastic or inelastic at this point? From what we learned in class, make sense for the restaurant to operate in this area of the demand curve (elastic/inelastic part)? 3 4. What is the profit of the restaurant at the optimal price and quantity, and what…
- You are managing a firm with market power, and you think the price elasticity of demand for your product is between 1.3 and 1.5. You estimate that your marginal cost is between $55 and $70. The price that you should set would range between $ and $. (Round your answers to two decimal places.) If you refine your estimate of the marginal cost to $80, the price you should set would now range between $ and $ (Round your answers to two decimal places.)Which lettered point (i.e. A,B,C,D) is at the price-quantity combination that would exist under an unregulated monopoly? Which lettered point (i.e. A,B,C,D) is at the price-quantity combination that would be efficient, from society’s perspective? Which lettered point (i.e. A,B,C,D) is at the price-quantity combination that, in theory, the regulator aims for? Send to: EveryoneA new restaurant – Uovo – has just opened in West L.A. It is serving the upscale market, with truly outstanding pasta that is flown in overnight from Bologna, Italy. Uovo offers a fixed-price menu with appetizer, three dishes of pasta, and a delicious tiramisu for dessert. The restaurant faces the following demand function: Q = 600 - 4P where Q is the number of guests per day. The marginal cost is constant at $50 per customer (including expenses for ingredients and personnel). The restaurant is paying a rent of $2,000 per day. What is the profit-maximizing number of guests that Uovo should serve each day, and what price should Uovo charge to maximize profit? What is the elasticity of demand at the optimal price and quantity? Is demand elastic or inelastic at this point? From what we learned in class, does it make sense for the restaurant to operate in this area of the demand curve (elastic/inelastic part)? What is the profit of the restaurant at the optimal price and quantity, and what…
- Black Box Cable TV is able to purchase an exclusive right to sell a premium movie channel (PMC) in its market area. Let's assume that Black Box Cable pays $150,000 a year for the exclusive marketing rights to PMC. Since Black Box has already installed cable to all the homes in its market area, the marginal cost of PMC to subscribers is zero. The manager of Black Box needs to know what price to charge for the PMC service to maximize her profit. Before setting price, she hires an economist to estimate demand for the PMC service. The economist discovers that there are two types of subscribers who value premium movie channels. First are the 4000 die-hard TV viewers who will pay as much as $150 a year for the new PMC premium channel. Second, the PMC channel will appeal to about 20,000 occasional TV viewers who will pay as much as $25 a year for a subscription to PMC. Refer to Scenario 15-3. What is the deadweight loss associated with the nondiscriminating pricing policy compared to the…Suppose that Jawa Timur Park offers a discount on admission to residents of Batu. What kind of price discrimination is this? What does this imply about the elasticity of demand for Jawa Timur Park attractions by Batu?Consider a monopoly market with demand curve Q(P) = . Suppose that producing a good costs $1 per unit and the firm must produce at least 1 unit by law. (1) What is the elasticity of demand? (2) How much would the monopolistic firm produce?