Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 2P
a.
To determine
If the restaurant should stay open or closed when marginal revenue is
b.
To determine
If the restaurant should stay open or closed when marginal revenue is
c.
To determine
Marginal revenue that would make
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Happy Go Lucky Electric Company is the only company
providing electric power to the city of Go Lucky. The
accompanying graph depicts their marginal costs (MC),
total costs (ATC), demand (D), and marginal
average t
revenue (MR).
Move point E to the firm's profit maximizing price and
quantity.
At the profit maximizing point, what is Happy Go Lucky
level of profit?
0 $150
$90
-$30
Price and Costs ($/unit)
10
9
8
7
6
10
4
3
2
1
0
0
5
10
15
20
25
30
35
MR
MC
0
ATC
D
40 45 50
Your product's revenue per unit is $30, and product's cost per unit is $10. If the demand for next month is 200 units, and it costs $1000 one time to set up the machine, what is our profit (in dollars) for next month?
A Caterpillar tractor one of the largest farm machinery in the world has requested for your services on pricing policy for its product. One of the things the company would like to to know is how much a 5% increase in price is likely to reduce the firm’s sales. What could you require in order to advice?
Chapter 3 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
Knowledge Booster
Similar questions
- Exercise 5.4 A company is producing and selling branded milk with the following total cost function: CT(q)= 0.2q²+q+70. If the demand function for this brand of milk is: P=15-0.5q: a) Calculate the optimal price of milk, as well as the optimal quantity sold and the profits of the company. b) Calculate the price elasticity of demand in the equilibrium of the company. c) Justify why the company has an excess of productive capacity. d) Represent graphically.arrow_forwardd) What will be the market price of repairing a puncture? e) What profit will each company obtain in a day? f) Show with graphs.arrow_forwardDaffy’s is a pet care company that recently increased the average price of its services by 5%. As a result, the number of customers dropped by 4%. How will this 5% increase of the average price of services impact total revenue at Daffy’s?arrow_forward
- The airline industry was hit particularly hard after the 9/11 attacks on the World Trade Center in 2001. In 2002, Southwest Airlines, one of the healthier airline companies, decided to lengthen the useful lives of its aircraft from 22 to 27 years. Shortly thereafter, following Southwest’s lead, other airlines made the same move.Would it have changed earnings or cash flows, and if it did, would the change have been favorable or negative? Is it favorable or negativearrow_forwardLesson 8 - Costs Question 2arrow_forwardIf Amit's Curry House took in $35 000 in revenue last week and had out-of-pocket expenses of $31 500, which of the following best describes Amit's profits last week? Amit really did NOT make any profit since he needs to put the difference between revenue and out-of-pocket expenses back into the firm. Amit made an economic profit of $3500. It is NOT clear whether Amit earned any profit last week because it depends on the magnitude of the implicit costs. Amit did NOT earn an economic profit.arrow_forward
- The pharmacy has switched wholesalers for its over the counter medication and it wants to get rid of its old inventory. Normally the pharmacy selles its generic ibuprofen for 7 pesos but is offering a flat-rate discount of 2.50 pesos. What is the selling price?arrow_forwardDo you see any conflict between your desire to be as profitable as possible and your desire to pay employees a living wage?arrow_forwardAt 130 units of output, marginal revenue is $8, marginal cost is $8, and average cost is $5. If consumers demand 130 units of output when the price is $9, what is the expected profit? Provide your answer below:arrow_forward
- Suppose you own a business form that faces the following demand curve: P = 8 0 - 2 Q . Further, MC = AC = $ 2 0 . Under “ the benchmark case ” , calculate the maximum amount of profits your firm can earn. 2 . Suppose you are earning the maximum profit, but your lease is up for renewal and the property owner wants to increase the rent by $ 5 0 0 . a . In response to the $ 5 0 0 additional cost, would you raise the price to cover the additional cost? Explain why you would or would not. Notice, rent is a fixed cost. b . In response to the $ 5 0 0 additional cost, suppose you implement a two - part tariff pricing strategy. Compute the amount of profit under the two - part tariff. c . Explain why the revenue is necessarily higher under the two - part than under the benchmark case.arrow_forwardPlace the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity. If the shop is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. If the shop is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. PRICE (Dollars per doughnut) 4.00 3.50 3:00 2.50 2.00 1.50 1.00 0.50 0 MC 0 05 ATC MR 25 30 20 1.6 1.0 QUANTITY (Thousands of doughnuts) 3.5 Demand 40 Profit Maximizing Outcome Profit Loss ?arrow_forwardProblem 3/ The demand function for a certain commodity is p(x)=10-0.001x, where p is measured in dollars and x is the number of units produced and sold. The total cost of producing x items is C(x)=50+5x Determine the level of production that maximizes the profit P(x), where P(x) = R(x) - C(x).arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning