The table below depicts the revenue for the only restaurant in a small rural town. It costs the restaurant $6.50 to prepare each meal. Use the table to answer questions. Quantity Price Total Revenue Marginal Revenue Total Costs Marginal Costs Economic Profit/Loss 0 $8.00 1 $7.50 2 $7.00 3 $6.50 4 $6.00 5 $5.50 What is the profit maximizing level of output for the monopolist? What is the economic profit at this level of output? What is the total economic surplus? What price should the restaurant charge if it wants to maximize the total economic surplus? (i.e. What level of output would achieve allocative efficiency? At this level of output what is the economic profit for the restaurant? How many meals will the restaurant produce if it can engage in perfect price discrimination? How much economic profit will the restaurant earn if they are able to charge each customer the maximum price they are willing to pay
The table below depicts the revenue for the only restaurant in a small rural town. It costs the restaurant $6.50 to prepare each meal. Use the table to answer questions. Quantity Price Total Revenue Marginal Revenue Total Costs Marginal Costs Economic Profit/Loss 0 $8.00 1 $7.50 2 $7.00 3 $6.50 4 $6.00 5 $5.50 What is the profit maximizing level of output for the monopolist? What is the economic profit at this level of output? What is the total economic surplus? What price should the restaurant charge if it wants to maximize the total economic surplus? (i.e. What level of output would achieve allocative efficiency? At this level of output what is the economic profit for the restaurant? How many meals will the restaurant produce if it can engage in perfect price discrimination? How much economic profit will the restaurant earn if they are able to charge each customer the maximum price they are willing to pay
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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- The table below depicts the revenue for the only restaurant in a small rural town. It costs the restaurant $6.50 to prepare each meal. Use the table to answer questions.
Quantity
Price
Total Revenue
Marginal Revenue
Total Costs
Marginal Costs
Economic
Profit/Loss 0
$8.00
1
$7.50
2
$7.00
3
$6.50
4
$6.00
5
$5.50
- What is the profit maximizing level of output for the monopolist? What is the economic profit at this level of output? What is the total economic surplus?
- What price should the restaurant charge if it wants to maximize the total economic surplus? (i.e. What level of output would achieve
allocative efficiency ? At this level of output what is the economic profit for the restaurant? - How many meals will the restaurant produce if it can engage in perfect
price discrimination ? How much economic profit will the restaurant earn if they are able to charge each customer the maximum price they are willing to pay
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