Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 17, Problem 9IAPA
To determine
Tommy's mark-up and economic profit are to be determined.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
The following graph shows Sparkle's demand curve, marginal-revenue (MR) curve, average-total-cost (ATC) curve, and marginal-cost (MC) curve.
Use the black point (plus symbol) to indicate Sparkle's profit-maximizing output and price.
True or False: Sparkle's profit is zero.
True
False
Suppose that Spacely Sprockets' marginal cost of a jacket is a constant $150 and the total fixed cost at one of its stores is
$3,000 a day. This particular store seils 40 jackets a day, which is its profit-maximizing number of jackets. The nearby
stores begin to advertise their jackets. The Spacely Sprockets store now spends $1,500 a day advertising its jackets, and its
profit-maximizing number of jackets sold jumps to 50 a day. What happens to the price of a Spacely Sprockets' jacket,
Spacely Sprockets' markup, and Spacely Sprockets' economic profit?
The following graph shows the daily demand curve for bippitybops in Detroit.
Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve.
Note: You will not be graded on any changes made to this graph.
PRICE (Dollars per bippitybop)
OTAL REVENUE (Dollars)
2400
1600
100
90
1200
80
1000
70
800
60
50
40
30
20
2200 +
10
2000 +
1800 +
0
1400 +
Calculate the daily total revenue when the market price is $90, $80, $70, $60, $50, $40, $30, and $20 per bippitybop. Then, use the green point
(triangle symbol) to plot the daily total revenue against quantity corresponding to these market prices on the following graph.
(?)
0
**
B
Demand
80
10 20 30 40 50 60 70
QUANTITY (Bippitybops per day)
90 100
Total Revenue
A
?
Total Revenue
Chapter 17 Solutions
Foundations of Economics (8th Edition)
Ch. 17 - Prob. 1SPPACh. 17 - Prob. 2SPPACh. 17 - Prob. 3SPPACh. 17 - Prob. 4SPPACh. 17 - Prob. 5SPPACh. 17 - Prob. 6SPPACh. 17 - Prob. 7SPPACh. 17 - Prob. 8SPPACh. 17 - Prob. 9SPPACh. 17 - Prob. 10SPPA
Ch. 17 - Washtenaw Dairy in Ann Arbor, Michigan, sells 63...Ch. 17 - Prob. 2IAPACh. 17 - Prob. 3IAPACh. 17 - Prob. 4IAPACh. 17 - Prob. 5IAPACh. 17 - Use the following information to work Problems 5...Ch. 17 - Prob. 7IAPACh. 17 - Prob. 8IAPACh. 17 - Prob. 9IAPACh. 17 - Prob. 1MCQCh. 17 - Prob. 2MCQCh. 17 - Prob. 3MCQCh. 17 - Prob. 4MCQCh. 17 - Prob. 5MCQCh. 17 - Prob. 6MCQCh. 17 - Prob. 7MCQ
Knowledge Booster
Similar questions
- Westchesser Gloves is a monopolistically competitive firm that sells leather gloves. Use the graph to highlight the area of profit or loss and answer the questions, Price per pair (5) 10 20 Marginal profit or loss: $ Aver co Pairs of gloves (in thousand) Demand 70 80 90 100 Profit or loss Calculate Westchesser's profit or loss at the profit-maximizing price. What will happen to the number of firms in this industry in the long run? Firms will enter this industry, increasing the price at which each firm can sell their gloves until firms begin to earn normal profits. O Firms will exit this industry, increasing the price at which each firm can sell their gloves until firms begin to carn normal profits. O Firms will exit this industry, decreasing the price at which each firm can sell their gloves until firms begin to carn normal profits. O Firms will enter this industry, decreasing the price at which each firm can sell their gloves until firma begin to carn normal profitsarrow_forwardThe following graph represents a monopolistically competitive firm in long-run equilibrium. Place the black point (cross sign) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Next, place the grey star on the graph to indicate the point where the LRAC reaches a minimum. PRICE PER UNIT (Dollars) 500 450 400 350 300 250 200 150 100 50 MC 0 0 50 LRAC MR Demand 100 150 200 250 300 350 400 450 500 QUANTITY (Units) Monopolistically Competitive Outcome Minimum of the LRAC The long-run equilibrium price is $ (Hint: Use the graph to find the numeric value of the price at equilibrium.) The long-run equilibrium quantity is units. The LRAC curve is at its minimum at a quantity of The long-run equilibrium price is units. the marginal cost of producing the equilibrium output. ?arrow_forward3. A Tennis Club has asked you to devise a profit-maximizing pricing strategy. It is known that a typical player's demand is given by P =40-20, where P is the price of 1 hour court time on the club's indoor tennis court, and Q is the number of hours of court time an individual player would demand during the tennis season. The marginal cost of 1 hour of court time is $2 and that fixed costs are practically zero. a) Calculate the profit-maximizing price and Tennis Club's profits (per player) assuming a per-unit price is charged each customer. b) Determine the profit-maximizing price and Tennis Club's profits (per player) assuming a two-part pricing strategy is adopted for each customer. Your answers: a) per-unit price strategy price profits b) two-part pricing strategy price profitsarrow_forward
- The following graph shows the dally demand curve for blkes in Denver. Use the green rectangle (trlangle symbols) to compute total revenue at various prices along the demand curve. Note: You will not be graded on any changes made to this graph. 120 110 100 Total Revenue 90 80 70 60 50 40 30 20 10 Demand 16 24 32 40 48 56 64 72 80 88 QUANTITY (Bikes) On the following graph, use the green point (triangle symbol) to piot the annual total revenue when the market price is $20, $30, $40, $50, $60, $70, and $80 per bike. 2770 2580 Tetal Revenue 2390 2200 W 2010 3 1920 1630 1440 1250 1060 30 40 50 50 70 80 90 100 110 120 PRICE (Dollars per bike) 10 20 According to the midpoint method, the price elasticity of demand between polnts A and B is approximately- Suppose the price of bikes Is currently $20 per blke, shown as point B on the Initlal graph. Because the demand between polnts A and B is v a $10-per-bike Increase in price will lead to v In total revenue per day. In general, In order for a…arrow_forwardSuppose that Roots' marginal cost of a jacket is a constant $75.00 and the total fixed cost at one of its stores is $2,000 a day. This store sells 25 jackets a day, which is its profit-maximizing number of jackets. Then the stores nearby start to advertise their jackets. The Roots store now spends $1,000 a day advertising its jackets, and its profit-maximizing number of jackets sold jumps to 75 a day. What is this store's average total cost of a jacket sold before the advertising begins and after the advertising begins. >>> Answer to 2 decimal places. Can you say what happens to the price of a Roots jacket, Roots' markup, and Roots' economic profit? Before the advertising begins, the average total cost of a jacket sold in this store is $ After the advertising begins, the average total cost of a jacket sold in this store is $ If the nearby firms' advertising decreases the demand for Roots' jackets and makes the demand more elastic, the price of a Roots' jacket If Roots' advertising…arrow_forwardDel's and Rodney's are two plumbing services in a gentrifying area of South East London. Within the area they service, the two firms operate as a duopoly and together serve one hundred percent of the available local market. One of their key lines of business is visiting customer's homes to install a new shower rail. A student project has been investigating the local plumbing business and has estimated the following information for Del's and Rodney's: Total demand for new shower rails per week is given by P = 200 - 4Q Where Q is total market demand and can be divided between Del's (qd) and Rodney's (qr) such that Q = qd + qr Assuming that the marginal cost of serving an extra customer is £40 for each, and that marginal revenue for Del is given by MRd 2008qd - 4qr And marginal revenue for Rodney is given by MRr Then 2008qr - 4qd 8 CONTINUEDarrow_forward
- A hair salon offers three services: haircuts, color treatment, and styling. The salon charges $40 for a cut, $65 for color, and $35 for styling. Last month, the salon sold 68 haircuts, 34 color treatments, and 22 styling sessions. If the salon's costs for the month totaled $2850, what was its profit? Instructions: Round your answer to the nearest dollar. $arrow_forwardThe following table contains different consumers' values for three software titles: PowerPoint, Excel, and Word. Suppose there are 100 consumers of each type. It costs Microsoft $0 to produce each piece of software. Consumer Types Administrative Assistants Marketing/Sales Accountants Price per each Profit on just that software PowerPoint Total profit on all software $76 $200 $25 A la carte pricing If Microsoft were to sell each of the software individually, what price should it set for each and what would its profits on each be? PowerPoint Excel $100 $100 $250 $ Word $200 $125 $25 Excel Word Bundled Pricing If Microsoft were to only sell the three products as a bundle, what price should they set for bundle and what would profits be? Bundled Price $ Total Profit S Mixed Pricing Suppose that Microsoft offered a bundle of all three for $375, but it also offers a price of $200 for each software separately. What is the new profit level for this pricing scheme?$ Is this mixed-pricing scheme…arrow_forwardUse the following table for questions Carving knives Home users Professional Chefs No-name brand $40 $70 High-end professional series $60 $130 How much would the firm make in revenue if it prices both its products successfully? Question 35 options: $110 $120 $130 $140arrow_forward
- Economicsarrow_forwardThe total revenue of a fimm decreased after an increase of the price of the goods it sells. Explain why this can happen. Include a graph in your explanation. Indicate price effect and output effect in your graph.arrow_forwardExercise 3.5. Pablo, Dirk and Franz run the only bar in town. Pablo wants to sell as many drinks as possible without losing money. Dirk wants the bar to bring in as much revenue as possible. Franz wants to make the largest possible profits. Using a single diagram of the bar's demand curve and its cost curves, show the price and quantity combinations favoured by each of the three partners. Explain.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, IncMicroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
- Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningEconomics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning