The figure shows the market demand curve for bread, together with original and new supplycurves, where the curve has shifted due to new bakeries entering the market. All bakeries areidentical, and there are no entry costs. Which of the following statements is correct?4.54.03.53.02.5€2.01.51.0Price, €0.50.0OriginalsupplyNew supplyDemand0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000Quantity: number of loavesO The bakeries' marginal cost of production has fallen.With the fall in price, the bakeries now make a loss.The supply of bread has become less elastic.New bakeries will continue to enter until the market price equals the firms' average cost.

In this scenario, we're analyzing a competitive market for bread with identical bakeries and no…

Answered: The figure shows the market demand…

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter19: Elasticity

Section: Chapter Questions

Problem 9QP

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Jackistheowneroftheonlylocalbarinasmalltown.Hesellswhiskeyin one-ounce glasses. For simplicity, let’s assume it doesn’t cost Jack anything to run his business. There are two customers, Adam and Burt who are twin brothers. Adam’s demand function is yA = 16 – 2p, and Burt’s demand function is yB = 8 – p (price is measured in dollars and quantity is measured by ounces). Jack knows their demand functions, but the problem is that he cannot tell them apart since they look exactly the same to him. To increase his profits, Jack offers the following two options that his customers can choose from: (1) You can pay $T1 up front and drink as much as you want; or (2) Pay $T2 up front and the price per ounce of whiskey will be $p. 1.a If p = 4, what is the maximal T2 that Jack can charge so that Burt is willing to come to the bar? 1.b What is the maximal T1 that Jack can charge so that Adam will choose the first pricing option?
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Below is a decision table for Gregor's Tennis School. Director Gregor Anderson is considering expanding his school to accommodate the potential increased interest in youth tennis lessons, camps and teams. The decision table below describes his situation. Alternatives Add a new building Extend hours for existing building Do Nothing Answer Decision Table High Demand 25,000 10,000 0 Step 3 of 3: What would Gregor's decision be if he applied the Maximax strategy? State of Nature Moderate Demand O Add a new building O Do Nothing O Extend hours for existing building 5,000 3,750 0 Low Demand -50,000 -6,000- 0 Tables Keypad Keyboard Shortcuts
es The table below depicts the demand for sunscreen at Daytona Beach. Demand for Sunscreen Price (dollars) $20.00 18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 Quantity (bottles) Total Revenue (dollars) 0 800 2,800 4,800 6,800 8,800 10,800 12,800 14,800 1222 Instructions: Enter your answer as a whole number. If you are entering a negative number include a minus sign. a. Fill in the total revenue column. b. When the price of a bottle of sunscreen decreases from $18.00 a bottle to $16.00 a bottle, what is the change in total revenue? $ c. When the price of a bottle of sunscreen decreases from $14.00 a bottle to $10.00 a bottle, what is the change in total revenue?
Genovia has experienced exceptional growth in recent years. Its GDP per capita (orIncome) has increased from around $30,000 to $50,000 in last 5 years. Over theperiod quantity demanded of personal cars has increased from 450,000 units per yearto 600,000 units. Quantity demanded of public transport, however, has declined from10,000 buses to 7,000 buses. Calculate income elasticity of demand and tell whichproduct is a normal good and which one is inferior.
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1. Jimmy Joe Bob, the self-processed truck king of Dog Patch Arkansas, sells used trucks (which he spells "trux"). The normal demand curve for Jimmy's trucks is: QD = 100 - 0.03P+ 0.0045PB - 0.6PG + 0.0051 +.012A Where Q-D is quantity demanded, P is the price of JJB's trucks, PB is the price of Bubba Will's - Jimmy's only competitor – trucks, PG is the price of gas, I is income, and A is JJB's advertising expenditures. A) If Jimmy sets his price at $4000, Bubba sets his price at $3000, the price of gas is $3.00 per gallon, average income in the community is $2500 and Jimmy spends $500 on advertising how many trucks does Jimmy sell? B) Derive the inverse demand curve for Jimmy's trucks. C) If the marginal cost of selling a truck is $2800 how many trucks should Jimmy sell to maximize his profits, and at what price should he sell those trucks? D) At that price and quantity what are Jimmy's profits?
Practice #6 Francine is a a dental floss tycoon living in Montana.  She faces the following demand curve for her product: Price ( in $/unit)          Quantity demanded 2.50                            1000 2.20                            2000 1.90                            3000 1.60                            4000 1.30                            5000 1.00                            6000  .70                             7000  .40                             8000 Francine has been told by her brother, who is currently taking a marketing class, that if she lowers her price by one increment(for example; changing price from .70 to .40, she will capture market share and increase total revenue.  All of her advisors within the company have assured Francine that her brother's advice may be correct, BUT the above demand curve will not change.  Assume that Francine knows the above demand curve will not change and is also considering her brother's advice.  The prices can only change in…
- E P3 P2 P1 A Q1 Q Q2 Q3 Q, Q5 Qs Refer to Figure 4.2. The demand curve A has a price elasticity the smallest price change will cause consumcrs to change their consumption by a large amount. O the smallest price incrcase will cause consumers to switch to the producer with the lowest prices. O consumers can purchase any quantity they want regardless of the price. O there is no change in quantity demanded as the pricc changes.
Femi's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Femi Initially produced five trucks, but then decided to increase production to six trucks. The following graph gives the demand curve faced by Femi's HookNLadder. As the graph shows, in order to sell the additional fire truck; Femi must lower the price from $160,000 to $120,000 per truck. Notice that Femi gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial five engines because they are all sold at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial five engines by selling at $120,000 rather than $160,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $120,000. PRICE (Thousands of dollars per fire engine) 8 8 2 2 2 2 8 2 2 2 20 220 200 180 160 140 120 100 60 40 0 2 3…

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