Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
8th Edition
ISBN: 9781337607735
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 15, Problem 8PA
Subpart (a):
To determine
Profit maximization.
Subpart (b):
To determine
The demand, marginal revenue and marginal cost curves.
Subpart (c):
To determine
Evaluate the shortage.
Subpart (d):
To determine
Evaluate shortage.
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Henry Potter owns the only well in town that produces clean drinking water. He faces the following demand, marginal revenue, and marginal cost
curves:
1
Demand:
P=100-Q
Marginal Revenue: MR 100-20
Marginal Cost:
MC=10+Q
On the following graph, use the blue line (circle symbol) to graph Mr. Potter's demand curve. Then, use the black line (cross symbol) to graph his
marginal revenue (MR) curve. Next, use the orange line (square symbol) to graph his marginal cost (MC) curve. Finally, use the grey point (star
symbol) to indicate the profit-maximizing price and quantity.
Price (Dollars)
110
100
90
NO
70
60
50
30
-20
30
40
60
60
-70
-60
90
110
30
50
70 80 90
Quantity (Units)
Demand
MR
MC
*
Profil-Maximization
The profit-maximizing quantity is
units, and the profit-maximizing price is $
(?)
Mayor George Bailey, concerned about water consumers, is considering a price ceiling that is 10% below the monopoly price.
At this new price, the quantity demanded would be
units.
At this quantity, the…
Henry Potter owns the only well in town that produces clean drinking water. He faces the following demand, marginal revenue, and marginal cost curves:
Demand:
P=60−QP=60−Q
Marginal Revenue:
MR=60−2QMR=60−2Q
Marginal Cost:
MC=QMC=Q
On the following graph, use the blue line (circle symbol) to graph Mr. Potter's demand curve. Then, use the black line (cross symbol) to graph his marginal revenue (MR) curve. Next, use the orange line (square symbol) to graph his marginal cost (MC) curve. Finally, use the grey point (star symbol) to indicate the profit-maximizing price and quantity.
:
The profit-maximizing quantity is___units, and the profit-maximizing price is___.
Mayor George Bailey, concerned about water consumers, is considering a price ceiling that is 10% below the monopoly price.
At this new price, the quantity demanded would be___units.
At this quantity, the marginal cost would be___the price. Therefore, the profit-maximizing Mr. Potter___produce…
A friend has just started up her own business. Her firm asks you how much to charge for her product to maximize profits. The demand schedule for it is given by the first two columns in the table below; its total costs are given in the third column. For each level of output, you can calculate total revenue, marginal revenue, average cost, and marginal cost. The profit-maximizing level of output can be found at the point where TR - TC is greatest, or where MR = MC, (or the last quantity where MR is still greater than MC.)
What is the profit-maximizing level of output for her product? 40
How much will she earn in profits? 80
Price Quantity TC TR? MR? MC?
$25.00 0 $130
$24.00 10 $275
$23.00 20 $435
$22.50 30 $610
$22.00 40 $800
$21.60 50 $1,005
$21.20 60 $1,225
Chapter 15 Solutions
Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
Ch. 15.1 - Prob. 1QQCh. 15.2 - Prob. 2QQCh. 15.3 - Prob. 3QQCh. 15.4 - Prob. 4QQCh. 15.5 - Prob. 5QQCh. 15 - Prob. 1CQQCh. 15 - Prob. 2CQQCh. 15 - Prob. 3CQQCh. 15 - Prob. 4CQQCh. 15 - Prob. 5CQQ
Ch. 15 - Prob. 6CQQCh. 15 - Prob. 1QRCh. 15 - Prob. 2QRCh. 15 - Prob. 3QRCh. 15 - Prob. 4QRCh. 15 - Prob. 5QRCh. 15 - Prob. 6QRCh. 15 - Prob. 7QRCh. 15 - Prob. 8QRCh. 15 - Prob. 1PACh. 15 - Prob. 2PACh. 15 - Prob. 3PACh. 15 - Prob. 4PACh. 15 - Prob. 5PACh. 15 - Prob. 6PACh. 15 - Prob. 7PACh. 15 - Prob. 8PACh. 15 - Prob. 9PACh. 15 - Prob. 10PACh. 15 - Prob. 11PACh. 15 - Prob. 12PA
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