2 One day you open the paper and read: "The number of subway rides in decrease...
2 One day you open the paper and read: "The number of subway rides in decrease by 8%, the first full month after the price token had risen by 50 cents to $1.50.
a. Use these data to estimate the price elasticity of demand for subway rides in that period.
b. According to your estimate, what happens to the Transit Authority's revenue when the fare rises?
3 Suppose firm F has the following marginal cost: MC = 2 + 6Q
a. Suppose it is a Competitive Market and the equilibrium price p* = 26. How many units would F produce?
b. Now suppose it is a Monopolist market and the marginal revenue is given by MR = 102 - 4Q?
c. Theoretically, would you suppose the monopolist case would yield a higher price or lower than the competitive market?
Homework Answers
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2 One day you open the paper and read: "The number of
subway rides in decrease...
Suppose subway ridership in New York City declined by 10 percent after a fare increase of...
Suppose subway ridership in New York City declined by 10 percent after a fare increase of 25 cents to $2.75. Using the midpoint method, an estimate of the price elasticity of demand for subway rides is . True or False: According to your estimate, the Transit Authority's revenue rises when the fare increases. True False
Chapter 5 Problem and Applications 1. Suppose the price elasticity of demand for heating oil is...
Chapter 5 Problem and Applications 1. Suppose the price elasticity of demand for heating oil is 0.2 in the short run and 0.7 in the long run. a. If the price of heating oil rises from $1.80 to $2.20 per gallon, what happens to the quantity of heating oil demanded in the short run? In the long run? (Use the midpoint method in your calculations.) b. Why might this elasticity depend on the time horizon? Cups of coffee and donuts...
1. You have the following information about a monopolist p = 60 − 2q (1) MR...
1. You have the following information about a monopolist p = 60 − 2q (1) MR = 60 − 4q (2) MC = 40 (3) where equation (1) is the demand curve, equation (2) is the marginal revenue function, and equation (3) is the marginal cost function, assumed to be constant here. (i). Under the perfect competition outcome, what would be the profit-maximizing level of output (qc) and price (pc)? (ii). Under the monopoly outcome, what would be the profit-maximizing...
QUESTION 1 1 points Let L represent the number of workers hired by a firm, and...
QUESTION 1 1 points Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are (1.8,Q-97) and (L·9,Qo1433. Then the marginal product of h worker is a 46 units of output. b. 143 units of output c1 unit of output. d. 59 units of output. 1 points QUESTION 2 Table t Bob's Bulldozers Cost Table Quantity able Margina erage age Average otal...
1. Miller 2. Suppose you are given the graphical summary of a monopolist below. Answer the following questions usin...
1. Miller 2. Suppose you are given the graphical summary of a monopolist below. Answer the following questions using this information Dollars 300 400 480 МА (a) The optimal short-term output level for the monopolistis (b) At the optimal level of output, marginal cost is (c) At the optimal level of output, total cost is (d) At the optimal level of output.price is and total revenue is (e) The monopolist is eaming a (profit, loss) of in the given situation....
Suppose a firm has a total cost function, T C = 3/8(Q^2) − 50, and therefore...
Suppose a firm has a total cost function, T C = 3/8(Q^2) − 50, and therefore marginal costs of MC = 3/4Q. Assume the market for this firm’s goods is perfectly competitive with a market price, P = 24. (a) Given the information above, is the firm in the short-run or long-run? (1 point) (b) Write down the firm’s marginal revenue equation. (1 points) (c) How many units should the firm produce if it wants to maximize profit? (3 points)...
Assume that one of the hot dog vendors successfully lobbies the city council to obtain the...
Assume that one of the hot dog vendors successfully lobbies the city council to obtain the exclusive right to sell hot dogs within the city limits. This firm buys up all the rest of the hot dog vendors in the city and operates as a monopoly. Assume that this change doesn't affect demand and that the new monopoly's marginal-cost curve corresponds exactly to the supply curve on the previous graph. Under this assumption, the following graph shows the demand (D),...
Question 7 (1 point) Price of taxi ride $4 60 80 Quantity of taxi rides Refer...
Question 7 (1 point) Price of taxi ride $4 60 80 Quantity of taxi rides Refer to the above diagram. If the price of a taxi ride increases from $6 to $8, producer surplus for this taxi driver will (rise, fall) by Include the $ sign and separate your two answers only with a comma and no space. For example, if your answer is" fall by $60.50, show this as fall,$60.50. If your answer is Eighty dollars, show this as...
number 2 a-d 1) Suppose the second-hand market for concert tickets is perfectly competitive and there...
number 2 a-d
1) Suppose the second-hand market for concert tickets is perfectly competitive and there are primarily 10 online websites where consumers can buy tickets. The following describes the market demand for concerts and the cost of selling tickets. Market Demand: Q = 480 - 4p. Cost to Fim: (q) = 2.57% + 100. Market Structure: Perfect Competition with N = 10 in the short-run. 2) In the above question, suppose Ticketmaster bought all the second-hand ticketing websites, so...
Question 22: Profit maximization for a monopolist Suppose you are the manager for Xclusive Tours, a...
Question 22: Profit maximization for a monopolist Suppose you are the manager for Xclusive Tours, a service company that sells boat rides to locals and tourists in Marina Bay. Suppose your firm is the only company that provides boat rides around the Marina Bay area (the Palm, Atlantis, Burj Al Arab, etc.); that is, Xclusive Tours is a monopoly in the Marina Bay Dubai location. Last year you hired a consultant to estimate the demand for boat rides in the...
Chapter 5 Problem and Applications 1. Suppose the price elasticity of demand for heating oil is 0.2 in the short run and 0.7 in the long run. a. If the price of heating oil rises from $1.80 to $2.20 per gallon, what happens to the quantity of heating oil demanded in the short run? In the long run? (Use the midpoint method in your calculations.) b. Why might this elasticity depend on the time horizon? Cups of coffee and donuts...
QUESTION 1 1 points Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are (1.8,Q-97) and (L·9,Qo1433. Then the marginal product of h worker is a 46 units of output. b. 143 units of output c1 unit of output. d. 59 units of output. 1 points QUESTION 2 Table t Bob's Bulldozers Cost Table Quantity able Margina erage age Average otal...
1. Miller 2. Suppose you are given the graphical summary of a monopolist below. Answer the following questions using this information Dollars 300 400 480 МА (a) The optimal short-term output level for the monopolistis (b) At the optimal level of output, marginal cost is (c) At the optimal level of output, total cost is (d) At the optimal level of output.price is and total revenue is (e) The monopolist is eaming a (profit, loss) of in the given situation....
Assume that one of the hot dog vendors successfully lobbies the city council to obtain the exclusive right to sell hot dogs within the city limits. This firm buys up all the rest of the hot dog vendors in the city and operates as a monopoly. Assume that this change doesn't affect demand and that the new monopoly's marginal-cost curve corresponds exactly to the supply curve on the previous graph. Under this assumption, the following graph shows the demand (D),...
Question 7 (1 point) Price of taxi ride $4 60 80 Quantity of taxi rides Refer to the above diagram. If the price of a taxi ride increases from $6 to $8, producer surplus for this taxi driver will (rise, fall) by Include the $ sign and separate your two answers only with a comma and no space. For example, if your answer is" fall by $60.50, show this as fall,$60.50. If your answer is Eighty dollars, show this as...
number 2 a-d
1) Suppose the second-hand market for concert tickets is perfectly competitive and there are primarily 10 online websites where consumers can buy tickets. The following describes the market demand for concerts and the cost of selling tickets. Market Demand: Q = 480 - 4p. Cost to Fim: (q) = 2.57% + 100. Market Structure: Perfect Competition with N = 10 in the short-run. 2) In the above question, suppose Ticketmaster bought all the second-hand ticketing websites, so...
Question 22: Profit maximization for a monopolist Suppose you are the manager for Xclusive Tours, a service company that sells boat rides to locals and tourists in Marina Bay. Suppose your firm is the only company that provides boat rides around the Marina Bay area (the Palm, Atlantis, Burj Al Arab, etc.); that is, Xclusive Tours is a monopoly in the Marina Bay Dubai location. Last year you hired a consultant to estimate the demand for boat rides in the...
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