Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
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Textbook Question
Chapter 17, Problem 17.10P
Wonopoly and natural resource prices
Suppose that a firm is the sole owner of a stock of a natural resource.
a. How should the analysis of the maximization of the discounted profits from selling this resource (Equation 17.63 be modified to take this fact into account?
b. Suppose that the
c. How would the answer to Problem 17.7 be changed if the entire crude oil supply were owned by a single firm?
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Assume that the quarterly demand for an SUV
produced by an automobile company is Qd :
150,000 – 1.5P, where Qd is quantity demanded
-
and P is price per vehicle.
A. Using the concept of elasticity of demand, what
price should be charged to maximize revenue
from sales of this SUV?
B. Derive the equation for total revetiue for this
product. Clearly show you steps.
C Using (b) above, determine the unit price that
maximizes total revenue from sales.
Smooth Sailing, Inc., has estimated the demand function for its sailboats (quantity purchased annually) as follows:
QD= 89,830-40PS+20Px+15Py+2I+0.001A+10W
Where,
QD = quantity purchased,
PS = the price of smooth sailing sailboats,
PX = the price of Company X’s sailboat,
PY = the price of Company Y’s motorboat,
I = per capita income in dollars,
A = dollars spent on advertising, and
W = number of favorable days of weather in the southern region of the United States.
Suppose that PS = $9,000, PX = $9,500, PY = $10,000, I = $15,000, A = $170,000, and W = 160. Find the price elasticity of demand at that point.
Is elastic, inelastic, or unitary elastic in part (a)? Justify?
5.21 explain
Chapter 17 Solutions
Microeconomic Theory
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