MICROECONOMICS-ACCESS CARD <CUSTOM>
11th Edition
ISBN: 9781266285097
Author: Colander
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Question
Chapter 16, Problem 4QAP
To determine
The suggestion of the statement about the long-term environmental sustainability of free
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
I am intrigued by the following article detailing how Nestle agreed to pay Starbucks $7.2B to distribute and sell Starbucks’ packaged coffees and teas around the world. Why would Nestle purposely put its competitors’ brands right next to it in the store, and then pay them for the privilege? Why wouldn’t Starbucks just take care of distributing its own brands rather than go through Nestle? Please explain how this outcome could be profit maximizing for both firms
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…
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…
Chapter 16 Solutions
MICROECONOMICS-ACCESS CARD <CUSTOM>
Ch. 16.1 - Prob. 1QCh. 16.1 - Prob. 2QCh. 16.1 - Prob. 3QCh. 16.1 - Prob. 4QCh. 16.1 - Prob. 5QCh. 16.1 - Prob. 6QCh. 16.1 - Prob. 7QCh. 16.1 - Prob. 8QCh. 16.1 - Prob. 9QCh. 16.1 - Prob. 10Q
Ch. 16 - Prob. 1QECh. 16 - Prob. 2QECh. 16 - Prob. 3QECh. 16 - Prob. 4QECh. 16 - Prob. 5QECh. 16 - Prob. 6QECh. 16 - Prob. 7QECh. 16 - Prob. 8QECh. 16 - Prob. 9QECh. 16 - Prob. 10QECh. 16 - Prob. 11QECh. 16 - Prob. 12QECh. 16 - Prob. 1QAPCh. 16 - Prob. 2QAPCh. 16 - Prob. 3QAPCh. 16 - Prob. 4QAPCh. 16 - Prob. 5QAPCh. 16 - Prob. 6QAPCh. 16 - Prob. 1IPCh. 16 - Prob. 2IPCh. 16 - Prob. 3IPCh. 16 - Prob. 4IPCh. 16 - Prob. 5IPCh. 16 - Prob. 6IPCh. 16 - Prob. 7IPCh. 16 - Prob. 8IPCh. 16 - Prob. 9IPCh. 16 - Prob. 10IPCh. 16 - Prob. 11IP
Knowledge Booster
Similar questions
- Devlin-McGregor (https://devlinmacgregor.com/) is the sole producer of Provasic which is made using only Soma. One unit of Soma produces one unit of Provasic. There are no other inputs into the Provasic production process. Devlin-McGregor purchases Soma from a monopoly supplier of that product. Presently, the supplier charges Devlin-McGregor a constant amount per unit of Soma. The Soma supplier is contemplating a change in how it prices. In return for discounting the unit price of Soma by 100×α %, it wants 100×α % of Devlin-McGregor’s revenues from the sale of Provasic. Is there a choice of α ∈ [0, 1] which would make the Soma supplier better off? Please, don't copy your answer from anywhere, and show your own work!arrow_forwardStudent question Time Left : 01:59:43 Ch. 4. Agglomeration Economies and Equilibrium vs. Efficient Cluster Size. The graph shows the relationship between the number of firms in a cluster (on the x-axis), against the profit per firm (on the y-axis). The curve shows the profit per firm as cluster size varies. Point A shows a single isolated firm, which earns a profit of 7₁ T2 T3 π1 1 b Profit per firm Profit: isolated firm 6 Number of firms in a cluster 14 a. Identify the point on the curve that represents the Pareto efficient outcome. What is the Pareto efficient number of firms and profit per firm? b. Identify the point on the curve that represents the Nash equilibrium outcome. What is the equilibrium number of firms and the equilibrium profit per firm? c. In one to two sentences, explain why your answers to parts a & b are different (or why they are the same, if that's the case). For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac).arrow_forwardIn 2009, Detroit, Michigan experienced an aggressive recession as compared to the rest of country. With unemployment rates topping 15%, the city was faced with many challenges financially, economically, and socially. In addition to the financial challenges, the city was also experiencing political instability and corruption. Various major city officials were being investigated for fraud, bribery, and other criminal charges. Spirit Electric, operating as a natural monopoly, was the only company in the area providing electric services to Detroit households. Like many other companies, it was experiencing financial difficulties and could no longer continue without some intervention. This was mainly due to high operating costs, foreclosures in the area, and the fact that many households were not paying their bills. As a result, Spirit Electric came to a standstill in the latter part of 2009. Matt Green, Spirit Electric CEO, gathered the Board of Directors and determined that the company…arrow_forward
- In 2009, Detroit, Michigan experienced an aggressive recession as compared to the rest of country. With unemployment rates topping 15%, the city was faced with many challenges financially, economically, and socially. In addition to the financial challenges, the city was also experiencing political instability and corruption. Various major city officials were being investigated for fraud, bribery, and other criminal charges. Spirit Electric, operating as a natural monopoly, was the only company in the area providing electric services to Detroit households. Like many other companies, it was experiencing financial difficulties and could no longer continue without some intervention. This was mainly due to high operating costs, foreclosures in the area, and the fact that many households were not paying their bills. As a result, Spirit Electric came to a standstill in the latter part of 2009. Matt Green, Spirit Electric CEO, gathered the Board of Directors and determined that the company…arrow_forwardDo firms really calculate marginal cost and marginal revenue to find the profit-maximizing output? If you examine the accounting records of most small businesses, you will be hard pressed to find explicit calculations of marginal cost and marginal revenue. So, why do economists develop rather elaborate, formal models of profit maximization when no one seems to do what we say they do?arrow_forwardThe attached graph shows the demand curve for a new digital product that you developed, (It might be a game, a video that you produced, or something else). Since it is digital, it is essentially costless for you to replicate the product, so all of your production costs are fixed (and now sunk) and variable costs are zero. a.) What does the marginal revenue (MR) curve look like for this demand curve? Explain your answer by giving the vertical and horizontal intercepts of the MR curve b.) Given your answer, what price should you charge for your new product in order to maximize your profit? How much revenue would you collect? Briefly explain. C.) What would be the economically efficient price for your new product? Briefly explain. d.) What is the consumer surplus loss from charging your profit-maximizing price instead of the economically efficient price?arrow_forward
- The government has announced its plans to license two firms to serve a market whose demand curve is given by P= 72-1Q The technology is such that each can produce any given level of output at zero cost, but once each firm's output is chosen, it cannot be altered. Instructions: Round your answers to the nearest penny (2 decimal places). a. What is the most you would be willing to pay for one of these licenses if you knew you would be able to choose your level of output first (assuming your choice was observable by the rival firm)? Skipped b. How much would your ival be willing to pay for the right to choose second?arrow_forward16-5. Your pharmaceutical firm is seeking to open up new international markets by partnering with various distributors. The different distribution within a country are stronger with different market segments (hospitals, retail pharmacies, etc.) but also have substantial overlap. A. In Egypt, you calculate that the annual value created by one distributor is $60 millions per year, but would be $80 millions if two distributors carried your product line. How much of the value can you expect to capture? B. Argentina also has two distributors with values similar to those in Egypt, but both are run by the government. How does this affect the amount you could capture? C. In Argentina a, if you do not reach an agreement with the government distributors, you can set up a less efficient Internet-based distribution system that would generate $20 million in value to you. How does tis affect the amount you could capture?arrow_forwardBusiness journalists frequently write that the financial markets expect that firms that possess market power (e.g., firms that have prominent brand names) will raise their prices on a regular (e.g., annual) basis. Is this a correct characterization of the pricing behavior of firms with market power (e.g., firms that are monopolies)?arrow_forward
- Using the IRAC rule,please answer and discuss the question. John entered into a contract for the sale of his restaurant to Catherine. One of the terms of the contract was that Catherine would not open up a similar business within 20 miles of the location of the restaurant being sold. About a month after the sale John noticed a spanking new restaurants two blocks down the road from his recently purchased business. When he found out that the proprietor of the new restaurant was Catherine, he sued for breach of contract. Explain the likely outcome based on the laws governing legality.arrow_forward2arrow_forwardFrom a Transaction Cost Economics perspective, when would you expect vertical integration to take place within an industry?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Microeconomics: Principles & PolicyEconomicsISBN:9781337794992Author:William J. Baumol, Alan S. Blinder, John L. SolowPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Microeconomics: Principles & Policy
Economics
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher: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
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning