Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 16, Problem 8SPPA
To determine
To find:
The price, quantity, economic profit, consumer surplus and
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Hot Air Balloon Rides is a single-price monopoly.
Columns 1 and 2 of the table set out the market demand
schedule and columns 2 and 3 set out the total cost
schedule.
Calculate Hot Air's profit-maximizing output and price.
Calculate the economic profit.
Hot Air's profit-maximizing number of rides is 3 a month
and the profit-maximizing price is $160 a ride.
>>> Answer to 1 decimal place.
C
Price
(dollars
per ride)
220
200
180
160
140
120
Quantity
(rides
per month)
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2
3
4
5
Total cost
(dollars per
month)
80
160
280
440
640
880
QUESTION 3
You are considering subscribing to ESPN+. You are willing to pay up to $83 per year for a subscription. The current annual price is $26. Calculate your consumer surplus under these circumstances.
QUESTION 4
180
168
156
144
132
120
108
96
84
72
60
48
36
24
12
0
0
45
90
135
180
225
270 315 360 405 450 495 540 585 630 675
Quantity
P -MR---MC=AC
A monopoly face the following demand, marginal revenue and marginal cost functions
Note that in this case MC(Q)= AC(Q) for all Q.
Calculate the monopoly's profits if the monopoly charges the single profit maximizing price
O 18,550
O 19,440
O 19,100
O 14,500
An unregulated natural monopoly bottles Mt. McKinley air, unique clean air that has no substitutes. The
monopoly's total fixed cost is $30,000 a year and its marginal cost is 10 cents a can.
The graph illustrates the demand for Mt. McKinley air.
Draw the average total cost curve. Plot the four control points at the quantities 100,000, 200,000,
300,000, and 400,000. Label the curve.
Draw a point at the new quantity and price if the regulator sets a price cap such that the monopoly
breaks even.
The number of cans produced
sold
its marginal cost.
A. is; benefit; exceeds
B. is not; benefit; exceeds
OC. is not; revenue; is greater than
D. is; revenue; equals
the efficient quantity because the marginal
from the last can
60-
50-
40-
30-
20 20
10-
Price (cents per can)
0-
ATC
MC
D
$300
100
200 300 400
Quantity (thousands of cans per year)
>>> Draw only the objects specified in the question.
500
Chapter 16 Solutions
Foundations of Economics (8th Edition)
Ch. 16 - Prob. 1SPPACh. 16 - Prob. 2SPPACh. 16 - Prob. 3SPPACh. 16 - Prob. 4SPPACh. 16 - Prob. 5SPPACh. 16 - Prob. 6SPPACh. 16 - Prob. 7SPPACh. 16 - Prob. 8SPPACh. 16 - Prob. 9SPPACh. 16 - Prob. 10SPPA
Ch. 16 - Prob. 11SPPACh. 16 - Prob. 1IAPACh. 16 - Prob. 2IAPACh. 16 - Prob. 3IAPACh. 16 - Prob. 4IAPACh. 16 - Prob. 5IAPACh. 16 - Prob. 6IAPACh. 16 - Prob. 7IAPACh. 16 - Prob. 8IAPACh. 16 - Prob. 9IAPACh. 16 - Prob. 10IAPACh. 16 - Prob. 1MCQCh. 16 - Prob. 2MCQCh. 16 - Prob. 3MCQCh. 16 - Prob. 4MCQCh. 16 - Prob. 5MCQCh. 16 - Prob. 6MCQCh. 16 - Prob. 7MCQ
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