imagine there are two cities (City A and City R) and you are the only provider of ice cream sandwiches for both. Use this information to answer the following questions: Maximum Willingness to Pay (MWP) for Ice Cream Sandwiches City A MWP City R MWP Aladdin $16 Richard $15 Alan $12 Ramon $14 Alvin $10 Robert $13 Albert $8 Roger $11 Albus $6 Reginald $4 Note: Unit cost is $7 for each ice cream sandwich.If a company is a profit-maximizing firm and can charge a single price in both cities, how much would its profit be?a.$6d.$60b.$20e.$64c.$25
Combined demand schedule:
| Q | P | TR | MR |
| 1 | 16 | 16 | 16 |
| 2 | 15 | 30 | 14 |
| 3 | 14 | 42 | 12 |
| 4 | 13 | 52 | 10 |
| 5 | 12 | 60 | 8 |
| 6 | 11 | 66 | 6 |
| 7 | 10 | 70 | 4 |
| 8 | 8 | 64 | -6 |
| 9 | 6 | 54 | -10 |
| 10 | 4 | 40 | -14 |
MR (nth unit) = TR (n units) - TR ((n-1) units)
TR = P x Q
MC = $ 7
Profit maximizing quantity = 5 (where MR > = MC for the last unit produced)
P = $ 12
Profit = 12 x 5 - 7 x 5 = $ 25
imagine there are two cities (City A and City R) and you are the only provider...
Refer to the following table. Imagine there are two cities (City A and City R) and you are the only provider of ice cream sandwiches for both. Use this information to answer the following questions: Maximum Willingness to Pay (MWP) for Ice Cream Sandwiches City A MWP City R MWP Aladdin $16 Richard $15 Alan $12 Ramon $14 Alvin $10 Robert $13 Albert $8 Roger $11 Albus $6 Reginald $4 Note: Unit cost is $7 for each ice cream sandwich....