Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
expand_more
expand_more
format_list_bulleted
Question
Chapter 14, Problem 14.13P
a)
To determine
To calculate:
Monopoly
b)
To determine
In case the question requires us to calculate the quantity, price, and profit while considering the shrouded charges.
c)
To determine
To calculate:
Consumer surplus using results from part b.
d)
To determine
The welfare and maximizing level of shrouding.
e)
To determine
The welfare maximizing subsidy and the distributional consequences of the same.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
GameZone, a video games store, is considering the best way to price two new games – a first-person shooter (FPS) and a racing game. There are four types of consumers that might buy the games with roughly equal numbers of each type, and their willingness to pay (WTP) for each game is detailed in the table below (assume that the willingness-to-pay for a second game of the same type is zero). How should Gamezone price the two games separately to maximise revenue? How should Gamezone price a bundle of both games to maximise revenue? Is there an alternative (involving bundling) that generates more revenue than either single prices or a bundle alone? Under what condition/s is bundling likely to increase profits for a firm?
Consumer Type
WTP for FPS game
WTP for racing game
A
$120
$70
B
$70
$120
C
$160
$10
D
$10
$160
Q2.
Your brother is considering two cell phone providers i.e. UFONE and MOBILINK.
UFONE charges Rs.520 (super card) per month for the service regardless of the number of phone
calls made. MOBILINK does not have a fixed service fee but instead charges Rs. 1 per minute for
calls. Your brother's monthly demand for minutes of calling is given by the equation
Q = 150 - 50P, where P is the price of a minute
a. With each service provider, what is the cost to your brother of an extra minute on the
phone?
b. In light of your answer to (a) part, how many minutes would your brother talk on the
phone with each service provider?
c. How much would he end up paying each provider every month?
Identify nine common pricing methods.
Knowledge Booster
Similar questions
- Do you agree that discounts represent the best policy for attracting customers?arrow_forwardAt the beginning of the year 2021, three friends, Ebo, Michael and Joseph decided to set up a company that produces a special kind of fruit juice called BB fruit juice in a city called St. Botch. As fresh graduate from the University of Professional Studies, Accra, you were employed as the firm's general manager in charge of the day to day running of the company. In order to make informed decisions about the firm's product, you employed an economist, who estimated the demand curve of the firm's product by using information from 30 supermarket as follows: Q$ = 99.5 – 2.5P, + 1.25P, – 0.21 + 0.15N + 0.04A Where Qg is the quantity demanded of BB fruit juice in bottles, P, is the per pottle price of BB fruit juice, P, is the per pottle price of Blue Sky, I is the per capita income of the people of St. Botch, N is the number of consumers and A is amount of money the company spends on advertising. In addition, the economist also estimated the supply function for the product as: Qi = -78 +…arrow_forwardI used to buy 3 movies a month, but when Connecting U dropped the price of a gigabyte of data from a high of $20 to a low of $14.48 (a total decrease of 32.02 percent according to the midpoint formula), I want to buy 5 movies a month. A) My demand for movies increases by 33.34% B) My demand for movies increases by 66.67% C) My demand for movies increases by 50% Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward
- Identify the five pricing policy decisionsmarketers must makearrow_forwardyou own a small cineplex theater with 200 seats. the demand for seats is Q=3000-20P. you are charging rm6.50 per ticket and selling tickets to 160 people. your costs are fixed at rm125 and do not depend on the number of people attending. should you cut your price to fill the theatee? explain. what other pricing policies might you use to increase your profits?arrow_forwardYou are a division manager at Toyota. If your marketing department estimates that the semiannual demand for the Highlander is Q = 150,000 – 1.5P, what price should you charge in order to maximize revenues from sales of the Highlander?arrow_forward
- In her spare time, your colleague is selling hand-carved wooden boxes on Etsy. The boxes are currently priced at $30/box. Your colleague is not happy with their current revenue stream and asks for your advice. You estimate that demand for your colleague's hand-carved wooden boxes is: Q = 800-20P. If your colleague is looking to maximize revenue, how should they price their wooden boxes? Keep prices at $30/box Lower prices to $20/box Raise price to $40/box Lower price to $25/box Raise prices to $35/boxarrow_forwardSuppose you are a fly-fishing guide. Your bookings of late have been low, and you are thinking of lowering the price of your guide service. If you lower your price, you’d expect more clients, ceteris paribus. But if other events occur at the same time as you decrease your prices, the expected increase in clients might not happen. Discuss possible outcomes in the following situations: a. You lower your price, and at the same time, many of the local rivers are closed to fishing due to a drought or forest fires. b. You lower your price, and at the same time, a new movie about fly-fishing is released and draws record attendance at the theaters.arrow_forwardQ5. Figure 18-9 shows how price is determined for express lanes in a value pricing (HOT lanes) policy. Vo represents Trip cost ($) Co Toll Toll Vo a Demand: low Trip cost the maximum amount of traffic volume that is possible without congestion the minimum amount of traffic volume that is possible without congestion O the maximum amount of traffic volume that would be willing to pay a toll O the minimum toll cost for the most congested periods Demand: high Vehiclesarrow_forward
- Please answer everything in the photo.arrow_forwardYou are a manager of an advertisingcompany. The company is running short offunds, so you decide to increase revenue.Should you increase or decrease the price ofrunning ads? Explain.arrow_forwardRefer to the table below to answer the questions. Use the mid-point formula. $4 A 10 B 9. C 8 7 F Demand 1 2 3 4 5 Q Number of gardenburgers 4.1) If the price of a gardenburger increases from RM8 to RM10, the price elasticity of demand equals 4.2) If the price of a gardenburger increases from RM6 to RM8, the price elasticity of demand equals 4.3) If the price of a gardenburger decreases from RM7 to RM6, the price elasticity of demand equals 4.4) If the price of a gardenburger decreases from RM9 to RM8, the price elasticity of demand equals 4.5) If the price of a gardenburger decreases from RM8 to RM7, the price elasticity of demand equals 4.6) If the price of a gardenburger increases from RM7 to RM9, the price elasticity of demand equals and demand is and demand is and the decrease results in a(n) in total revenue. and demand is and demand is and the increase results in a(n) in total revenue. Pricearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningEconomics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning