Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 18, Problem 7IAPA
To determine
To explain:
The fair-fixing scheme which is a result of the equilibrium outcome of an oligopoly cartel game and the reason the cartel survived.
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Question 5: Jimmy has a room that overlooks, from some distance, a major league baseball stadium. He decides to
rent a telescope for $50 a week and charge his friends and classmates to use it to peep at the game for 30 seconds. He
can act as a monopolist for renting out "peeps". For each person who takes a 30 second peep, it costs Jimmy $.20 to
clean the eyepiece. Jimmy believes he has the following demand for his service:
Price of
a Peep
$1.20
Quantity
of peeps demanded
1.00
90
100
150
200
250
300
70
60
50
350
40
30
400
450
20
10
500
550
a) For each price, calculate the total revenue from selling peeps and themarginal revenue per
peep.
Price
Quantity
TR
MR
$1.20
100
90
100
150
200
70
250
60
300
350
50
40
30
400
450
20
500
10
550
b) At what quantity will Jimmy's profit be maximized? What price will he charge? What will his total profit be?
c) Jimmy's landlady complains about all the visitors coming into the building and tells Jimmy to stop selling
peeps. Jimmy discovers, though, if he…
Justify if each of the following statements is TRUE or FALSE. If the statement is TRUE, just write “True”.
If the statement is FALSE, explain why it is wrong.
a) Pos Malaysia is the sole firm which provides courier services in Malaysia. It is considered a monopolist in Malaysia.
b) Sarawak Energy is the sole supplier of electricity transmission and distribution in Sarawak. It is a monopolist in Sarawak.
c) Shell Out is a seafood restaurant with many outlets in Selangor and Kuala Lumpur. It is doing business in the perfectly competitive market.
Price Discrimination:
You own a set of sports memorabilia that you could sell in Rochester and Minneapolis. You could sell them as a bundle or seperately in Rochester or Minneapolis. You know the WTP of your customers/collectors in both cities (see below for the WTP). You costs are $1000 for the Rochester memorabilia and $3000 for the Vikings memorabilia.
A. if arbitrage is NOT possible, what is the profit you sell the movies as a bundle versus as singles in both cities?
B. if arbitrage IS possible, what profit would you make if you sell them as a bundle in both cities?
WTP for Roch Mem.
WTP for vikings mem.
rochester
12,000
7000
minneapolis
4000
15,000
Chapter 18 Solutions
Foundations of Economics (8th Edition)
Ch. 18 - Prob. 1SPPACh. 18 - Prob. 2SPPACh. 18 - Prob. 3SPPACh. 18 - Prob. 4SPPACh. 18 - Prob. 5SPPACh. 18 - Prob. 6SPPACh. 18 - Prob. 7SPPACh. 18 - Prob. 8SPPACh. 18 - Prob. 1IAPACh. 18 - Prob. 2IAPA
Ch. 18 - Prob. 3IAPACh. 18 - Prob. 4IAPACh. 18 - Use this information to work Problems 5 to 7. DOJ...Ch. 18 - Use this information to work Problems 5 to 7. DOJ...Ch. 18 - Prob. 7IAPACh. 18 - Which of the following statements is incorrect. In...Ch. 18 - If firms in oligopoly form a cartel, it will...Ch. 18 - Prob. 3MCQCh. 18 - Prob. 4MCQCh. 18 - Prob. 5MCQCh. 18 - Prob. 6MCQCh. 18 - Prob. 7MCQ
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