The second column shows Shane’s marginal value schedule, which is also his demand schedule when he is offered a single price and can buy as many donuts as he wants at that price. The third column shows Miriam’s marginal cost schedule. Answer the following questions, and include a couple of sentences providing an explanation for your answer.   If Miriam can charge a different price for different quantities, and if she is trying to maximize her producer surplus how many donuts will she sell? Does your answer to (a.) violate our result that profit is maximized by setting the quantity where marginal revenue equals marginal cost?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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The second column shows Shane’s marginal value schedule, which is also his demand schedule when he is offered a single price and can buy as many donuts as he wants at that price. The third column shows Miriam’s marginal cost schedule. Answer the following questions, and include a couple of sentences providing an explanation for your answer.

 

If Miriam can charge a different price for different quantities, and if she is trying to maximize her producer surplus how many donuts will she sell?

Does your answer to (a.) violate our result that profit is maximized by setting the quantity where marginal revenue equals marginal cost?

Number of Shane's Marginal
Donuts Personal Use Value
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
$0.00
$2.00
$1.90
$1.80
$1.70
$1.60
$1.50
$1.40
$1.30
$1.20
$1.10
$1.00
$0.90
$0.80
$0.70
$0.60
$0.50
$0.40
$0.30
$0.20
$0.10
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
Miriam's
Marginal Personal
Use Value
$0.00
$1.50
$1.45
$1.40
$1.35
$1.30
$1.25
$1.20
$1.15
$1.10
$1.05
$1.00
$0.95
$0.90
$0.85
$0.80
$0.75
$0.70
$0.65
$0.60
$0.55
$0.50
$0.45
$0.40
$0.35
$0.30
$0.25
$0.20
$0.15
$0.10
Number of
Donuts
Shane's
Demand
Schedule
1
$
2 $
3 $
4 $
5 $
6 $
7 $
8 $
9 $
10 $
11 $
12 $
13 $
Miriam's
Supply
Schedule/
Marginal
Cost
Total
Revenue Total Cost
1.70 $ 0.90 $
1.60 $ 0.95 $
1.50 $ 1.00 $
1.40 $ 1.05 $
1.30 $ 1.10 $
1.20 $
1.10 $
1.00 $
0.90 $
0.80 $
1.15 $
1.20 $
1.25 $
1.30 $
1.35 $
1.40 $
0.70 $
0.60 $
1.45 $
0.50 $
1.50 $
Profit
(Producer
Surplus)
0.80
1.35 $
1.65 $
1.70 $
1.50 $
1.70 $
3.20 $
0.90 $
1.85 $
2.85 $
4.50 $
5.60 $ 3.90 $
6.50 $
5.00 $
7.20 $
6.15 $
7.70 $
8.00 $
8.10 $
7.35 $
8.60 $
8.00 $
9.90 $
11.25 $
12.65 $
7.70 $
7.20 $
14.10 $
15.60 $
6.50 $
Total
Surplus
1.05 $
0.35 $
(0.60) $
(1.80) $
(3.25) $
(4.95) $
(6.90) $
(9.10) $
0.8
1.45
1.95
2.30
2.50
2.55
2.45
2.20
1.80
1.25
0.55
(0.30)
(1.30)
Miriam's Shane's
Profit
Surplus
$
0.80
$
0.65
$ 0.50
$
0.35
$
0.20
$
0.05
$
(0.10)
$
(0.25)
$
(0.40)
$
(0.55)
$
(0.70)
(0.85)
$
$
(1.00)
Transcribed Image Text:Number of Shane's Marginal Donuts Personal Use Value 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 $0.00 $2.00 $1.90 $1.80 $1.70 $1.60 $1.50 $1.40 $1.30 $1.20 $1.10 $1.00 $0.90 $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Miriam's Marginal Personal Use Value $0.00 $1.50 $1.45 $1.40 $1.35 $1.30 $1.25 $1.20 $1.15 $1.10 $1.05 $1.00 $0.95 $0.90 $0.85 $0.80 $0.75 $0.70 $0.65 $0.60 $0.55 $0.50 $0.45 $0.40 $0.35 $0.30 $0.25 $0.20 $0.15 $0.10 Number of Donuts Shane's Demand Schedule 1 $ 2 $ 3 $ 4 $ 5 $ 6 $ 7 $ 8 $ 9 $ 10 $ 11 $ 12 $ 13 $ Miriam's Supply Schedule/ Marginal Cost Total Revenue Total Cost 1.70 $ 0.90 $ 1.60 $ 0.95 $ 1.50 $ 1.00 $ 1.40 $ 1.05 $ 1.30 $ 1.10 $ 1.20 $ 1.10 $ 1.00 $ 0.90 $ 0.80 $ 1.15 $ 1.20 $ 1.25 $ 1.30 $ 1.35 $ 1.40 $ 0.70 $ 0.60 $ 1.45 $ 0.50 $ 1.50 $ Profit (Producer Surplus) 0.80 1.35 $ 1.65 $ 1.70 $ 1.50 $ 1.70 $ 3.20 $ 0.90 $ 1.85 $ 2.85 $ 4.50 $ 5.60 $ 3.90 $ 6.50 $ 5.00 $ 7.20 $ 6.15 $ 7.70 $ 8.00 $ 8.10 $ 7.35 $ 8.60 $ 8.00 $ 9.90 $ 11.25 $ 12.65 $ 7.70 $ 7.20 $ 14.10 $ 15.60 $ 6.50 $ Total Surplus 1.05 $ 0.35 $ (0.60) $ (1.80) $ (3.25) $ (4.95) $ (6.90) $ (9.10) $ 0.8 1.45 1.95 2.30 2.50 2.55 2.45 2.20 1.80 1.25 0.55 (0.30) (1.30) Miriam's Shane's Profit Surplus $ 0.80 $ 0.65 $ 0.50 $ 0.35 $ 0.20 $ 0.05 $ (0.10) $ (0.25) $ (0.40) $ (0.55) $ (0.70) (0.85) $ $ (1.00)
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