MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 6IP
(a)
To determine
Cause for the frequent flyer or visitor bonus rather than lower
(b)
To determine
Other programs similar to a frequent flyer or visitor program.
(c)
To determine
Reason for the third party payer and frequent traveler benefit non-transfer.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
A company is considering building a bridge across a river. The bridge would cost $2 million to build and nothing to maintain. The following table shows the company's anticipated demand over the lifetime of the bridge:
a. If the company were to build the bridge, what would be its profit-maximizing price?Would that be the efficient level of output? Why or why not?b. If the company is interested in maximizing profit, should it build the bridge? What would be its profit or loss?c. If the government were to build the bridge, what price should it charge?d. Should the government build the bridge? Explain.
Ilsia is driving home from work. She needs to buy gas and notices an Exxon-Mobil station on one side of the street and a Shell station on the other side of the street. Although run by different companies, the two stations sell gasoline at the same price.
a. The most likely reason that the price is the same is that
drivers need gas and are willing to pay whatever price a gas station charges.
consumers view gasoline from different gas stations as perfect substitutes.
government regulation requires both gas stations to charge the same price.
gas stations always make a profit, so they can charge any price they want.
b. If one station increases its price,
it will make a higher profit.
it will lose customers to the cheaper station across the street.
it will be fined by the government.
it will sell more gasoline.
Xerox, the U.S. Postal Service, and McDonald's have enjoyed significant market power in the past. List and explain
three major factors that have eroded this market power.
Market power is eroded when
A. better substitutes become available because the market has less competition.
B. better substitutes become available because consumers will not be willing to pay as much for a good.
C. fewer substitutes are available because the market has less supply.
D. no substitutes are available because consumers have no choices.
O E. fewer substitutes are available because consumers are more sensitive to prices.
Market power is eroded when
A. existing firms exit the market because this increases the profits of remaining firms.
B. more firms enter selling different products because this introduces complements.
C.
more firms enter selling the same product because this increases competition.
O D.
barriers block entry of new firms because consumers will not be willing to pay as much for a good.
E.…
Chapter 5 Solutions
MICROECONOMICS
Ch. 5.1 - Prob. 1QCh. 5.1 - Prob. 2QCh. 5.1 - Prob. 3QCh. 5.1 - Prob. 4QCh. 5.1 - Prob. 5QCh. 5.1 - Prob. 6QCh. 5.1 - Prob. 7QCh. 5.1 - Prob. 8QCh. 5.1 - Prob. 9QCh. 5.1 - Prob. 10Q
Ch. 5.A - Prob. 1QECh. 5.A - Prob. 2QECh. 5.A - Prob. 3QECh. 5.A - Prob. 4QECh. 5.A - Prob. 5QECh. 5.A - Prob. 6QECh. 5.A - Prob. 7QECh. 5.A - Prob. 8QECh. 5.A - Prob. 9QECh. 5 - Prob. 1QECh. 5 - Prob. 2QECh. 5 - Prob. 3QECh. 5 - Prob. 4QECh. 5 - Prob. 5QECh. 5 - Prob. 6QECh. 5 - Prob. 7QECh. 5 - Prob. 8QECh. 5 - Prob. 9QECh. 5 - Prob. 10QECh. 5 - Prob. 11QECh. 5 - Prob. 12QECh. 5 - Prob. 13QECh. 5 - Prob. 14QECh. 5 - Prob. 15QECh. 5 - Prob. 16QECh. 5 - Prob. 17QECh. 5 - Prob. 1QAPCh. 5 - Prob. 2QAPCh. 5 - Prob. 3QAPCh. 5 - Prob. 4QAPCh. 5 - Prob. 5QAPCh. 5 - Prob. 1IPCh. 5 - Prob. 2IPCh. 5 - Prob. 3IPCh. 5 - Prob. 4IPCh. 5 - Prob. 5IPCh. 5 - Prob. 6IPCh. 5 - Prob. 7IPCh. 5 - Prob. 8IPCh. 5 - Prob. 9IPCh. 5 - Prob. 10IPCh. 5 - Prob. 11IPCh. 5 - Prob. 12IPCh. 5 - Prob. 13IPCh. 5 - Prob. 14IP
Knowledge Booster
Similar questions
- In what situation would a company give a discount?arrow_forwardM1arrow_forwardYou live in a town with 300 Adults and 200 children, and you arc thinking about putting on a play to entertain your neighbors and make some money. A play has a fixed cost of $2,000, but selling an extra ticket has zero marginal cost. Here are the demand schedules for your two types of customer: a. To maximize profit, what price would you charge for an adult ticket? For a child's ticket?How much profit do you make?b. The city council passes a law prohibiting you from charging different prices to different customers. What price do you set for a ticket now? How much profit do you make?c. Who is worse off because of the law prohibiting price discrimination? Who is better off? (If you can, quantify the changes in welfare.)d. If the fixed cost of the play were $2,500 rather than $2,000, how would your answers to parts (a), (b), and (c) change?arrow_forward
- Use the table below to answer the following questions:QuantityDemand (Price)Marginal RevenueMarginal CostAverage Cost1$120012005005002110010002753883100080022533349006002503135800400400330670020050035876000700407 Are there consumers who want the product but are not willing to pay the profit-maximizing price the firm will charge? How can you tell?If the firm could charge every consumer exactly what that consumer was willing to pay (called perfect price discrimination), would the quantity the firm produced increase, decrease, or remain the same? Would the firm’s profits increase, decrease, or remain the same? Explain your answers.arrow_forwardFiona’s gym teacher tells her about a job opening at the local fitness center. What has the gym teacher given Fiona? A market A cold call A network A job leadarrow_forwardurgnt plzarrow_forward
- Suppose Sam sells apples, picked from his apple tree, in a competitive market. Assume all apples are equal in quality, but grow at different heights on the tree. Sam, being fearful of heights, demands greater compensation the higher he goes: So for him, the cost of grabbing an apple rises higher and higher, the higher he must climb, as shown in the Total Cost column in the following table. The market price of an apple is $0.50. a. Does this suggest that the marginal cost of apples is increasing, decreasing, or staying the same as the quantity of apples picked increases? Why? b. Complete the table. c. How many apples does Sam pick?arrow_forwardFirms must typically purchase inputs from suppliers to produce output. What effect might suppliers have on an industry? A. If many firms can supply an input comma then suppliers are like to have the bargaining power to limit a firm's profits. B. If suppliers are price takers, then a firm will likely be a price taker with no ability to raise price. C. If an input is specialized comma then the supplier is likely to have the bargaining power to limit a firm's profits. D. Suppliers cannot affect output markets, although an output market with only a few firms is likely to have the bargaining power to limit a supplier's profits. E. If only a few firms can supply an input, then markets will likely experience shortages because firms are unable to produce sufficient output.arrow_forwardWhat kind of firm can sell all its product at the market price but nothing above that price?arrow_forward
- Deborah sells bottled water from a small stand by the beach. On the last day of summer vacation, many people are on the beach, and Deborah realizes that she can make a lot more money this day if she hires someone to walk up and down the beach selling water. She finds a college student named Carlos and makes him the following offer: They'll each sell water all day and split their earnings (revenue minus the cost of water) equally at the end of the day. Deborah knows that if they both work hard, Carlos will earn $90 on the beach and Deborah will earn $180 at her stand, so they will each take home half of their total revenue: = $135. If Carlos shirks, he'll generate only $50 in earnings. Deborah does not know that Carlos estimates his personal cost (or disutility) of working hard as opposed to shirking at $25. $90+$180 Once out of Deborah's sight, Carlos faces a dilemma: work hard (put in full effort) or shirk (put in low effort). In terms of Carlos's total utility, it is better for him…arrow_forwardThe table below shows the weekly marginal cost (MC) and average total cost (ATC) for Smitten, a perfectly competitive firm that produces children's mittens in a competitive market. Smitten's Production Costs Quantity (pairs of Marginal Cost mittens) 5 10 15 20 25 30 35 40 Costs (dollars) 10 9 Smitten's marginal cost and average total cost curves are shown below. 8 7 5 m 21 (dollars) $1.50 2.00 2 2.50 3.50 4.00 5.00 6.00 8.50 34 Smitten's Costs of Production 5 MC ATC Average Total Cost (dollars) $8.00 5.00 10 15 20 25 30 35 40 45 50 Quantity (pairs of mittens) 4.50 4.00 4.00 4.50 5.00 5.50arrow_forwardImagine you are the owner of the Omaha Surfboard Company. You have a branch in Omaha and in Long Beach CA. After some market research you find the following surfboard demand for each market, Omaha Demand: Qo = 1000 – 10P Long Beach Demand: QL = 1000 – 5P Combined/Total Demand: Q = 2000 – 15P Your marginal cost is constant at $40. a. Find your price and quantity if you treated the market as a single entity with a single price. What is your profit? (Hint: find Marginal Revenue and set equal to MC) b. If you treat each market separately, what is P and Quantity in each market, and final profit?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, IncEconomics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
- Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningEconomics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
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