11) Suppose the city of LA is considering a proposal to award an exclusive contract to an electricity provider. The demand function has been estimated to be P = 60 – 2Q and the total cost function has been estimated to be TC(Q) = 240 + 0.5Q² where Q is the number of internet contracts (in thousands) and P is the price of monthly internet service. a. What would be the allocatively efficient price and quantity? b. What price and quantity would be expected if the firm can operate completely unregulated? What is the firm's profit? What is the consumer surplus? c. What would be the minimum price charged to the marginal consumer if the firm can execute first degree

11) Suppose the city of LA is considering a proposal to award an exclusive contract to an electricity provider. The demand function has been estimated to be P = 60 – 2Q and the total cost function has been estimated to be TC(Q) = 240 + 0.5Q² where Q is the number of internet contracts (in thousands) and P is the price of monthly internet service. a. What would be the allocatively efficient price and quantity? b. What price and quantity would be expected if the firm can operate completely unregulated? What is the firm's profit? What is the consumer surplus? c. What would be the minimum price charged to the marginal consumer if the firm can execute first degree

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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11) Suppose the city of LA is considering a proposal to award an exclusive contract to an electricity provider. The demand function has been estimated to be P = 60 – 2Q and the total cost function has been estimated to be TC(Q) = 240 + 0.5Q? where Q is the number of internet contracts (in thousands) and P is the price of monthly internet service. a. What would be the allocatively efficient price and quantity? b. What price and quantity would be expected if the firm can operate completely unregulated? What is the firm's profit? What is the consumer surplus? c. What would be the minimum price charged to the marginal consumer if the firm can execute first degree price discrimination? What is the firm’'s profit? What is the consumer surplus? d. Would it be feasible to regulate this firm with an allocatively efficient price cap? e. Calculate the deadweight loss in parts B and C. Identify the DWL on a graph.
The Rolling Creek Textile Mill makes denim. The monthly fixed cost is $8,000, and the variable cost per yard of denim is $0.35. Price is related to demand, according to the following linear equation: v = 17,000 - 5,666p Develop the nonlinear profit function for the textile mill and determine the optimal price, the optimal volume, and the maximum profit per month.
A local company is planning to manufacture and market a four-slice toaster. For this toaster, the research department’s estimates are aweekly demand of 300 toasters at a price of $25 per toaster and a weekly demand of 400 toasters at a price of $20. The financial department’s estimates are fixed weekly costs of$5,000 and variable costs of $5 per toaster. a) Assume that the relationship between price ? and demand ? is linear. Use the research department’s estimates to express ? as a function of ? and determine the domain of the function. b) Using your knowledge from Finite Math, determine the Revenue function in terms of ?. c) Determine the Marginal Revenue at 2 different production levels for example 250 and 500 units. Interpret these results. (HINT: Consider what a positive or negative first derivative implies) d) Assume that the cost function is linear. Use the financial department’s estimates to express the cost function interms of ?. e) Determinethe Marginal costand interpret the…
Exercise 4.6 An econometrician hired to analyse a local golf course has determined that there are two types of golfers, the regular and the occasional. The annual demand for games from regular players is given by QH = 24 – 0.3P, where P is the price of a round of golf. On the other hand, the annual demand for occasional items is given by QO = 10 – 0.1P. The marginal cost and the average total cost per item are equal to €20. a) If you could distinguish between regular and casual players, what price would be set for each type? How many games would each type of player play? How much profit could the golf course generate? Represent graphically. b) As an alternative to the discrimination of third degree prices, those in charge consider a double tranche rate according to which the members can play as many games as they wish at a price of € 20 per game. How much profit will the golf course generate if it charges all players the same annual fee for becoming a member of the club? What if you…
The FIA Formula 1 World Championship to be held during the 2021 Mexico City Grand Prix has a total cost function equal to CT = Q33 + Q2 + 125Q and an inverse demand function of P = 200−2Q. Now suppose there is a new company managing this event, so the total cost function becomes CT = 4Q. This new company intends to sell at two different prices depending on the place that the spectators occupy at the Hermanos Rodríguez Autodrome. For the Red Zone Boxes. The estimated demand will be q1 = 32−12p1 and for the Green Zone Boxes It will be q2 = 42 − p2. The number of tickets sold for the Red Zone and Green Zone will be: 15; 84 23; 16 15; 19 33; 45
Northside Social (NS) sells cups of coffee and amazing breakfast sandwiches. The current price of a cup of coffee is $3.00 and the current price of an amazing breakfast sandwich is $8.00. At those prices, NS sells 1000 cups of coffee and 200 breakfast sandwiches daily. NS faces a constant marginal cost for each cup of coffee of 50 cents and the constant marginal cost of breakfast sandwiches is $2. NS increases the price of coffee 5%, to $3.15. After the price increase, NS sells 900 cups of coffee, a decrease of 10% in cups of coffee. Assuming the above, what if NS also changes the price of breakfast sandwiches from $8 to $10 (a 25% increase in price) and that the number of breakfast sandwiches sold decreases from 200 to 180 (a 10% decrease in quantity). Which of the following is true? A) Coffee profits and breakfast sandwich profits increase.B) Coffee profits decrease by more than breakfast sandwich profits decrease.C) Coffee profits decrease by more than breakfast sandwich profits…
Homework(Ch 15) 4. Profit maximization and loss minimization BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville. Suppose that BYOB cannot price discriminate; that is, it sells its beer at the same price per can to all customers. The following graph shows the marginal cost (MC), marginal revenue (MR), average total cost (ATC), and demand (D) for beer in this market. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity for BYOB. If BYOB is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. On the other hand, if BYOB is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. PRICE (Dollars per can) 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0 MC 0 0.5 ATC 1.5 MR 1.0 2.0 2.5 3.0 QUANTITY (Thousands of cans of beer) 3.5 4.0 + Monopoly Outcome OL Profit Loss a I' n
c. Note that these results imply the marginal revenue, or marginal benefit, of website analysis is MB(X) = 11.09 − 0.2 × X and the marginal cost of website analysis is MC(X) = 0.21 × X. What level of website analysis will maximize net benefits? Round to the nearest hundredth.
Let's say jacky has a demand function for a product made in Ney york city given that the function D(q)=-1.15q+270, where q is the number of items in demand and D(q) is the price per item, in dollars, that can be charged when q units are sold. Say that the fixed costs of production for the item is $5,000 and variable costs are $10 per item produced. If 100 items are produced and sold, what are the finds :
Supply and Demand Q2 The demand curve for tickets at an amusement park is: Q=D(p)=1900−45pQ=D(p)=1900-45p, p > 0 All customers pay the same ticket price. The marginal cost of serving a customer is $14. Using calculus and formulas (don't just build a table in a spreadsheet as in the Marginal Analysis I lesson) to find a solution, what is the profit-maximizing price? Round the equilibrium quantity DOWN to its integer part and round the equilibrium price to the nearest cent.
Use the interactive points to locate the point of critical mass and equilibrium for a hypothetical network good, the questions that follow. Price ($) 50 45 Critical mass Equilibrium 40 40 35 30 25 20 15 10 5 Marginal cost Demand 0 0 10 20 30 40 50 60 70 80 90 100 Quantity of users (in thousands)
Green et al. (2005) estmate the supply and demand curves for Californa processod tomatoes. The supply function is: \[ \ln \left(Q_{s}\right)=0.200+0.550 \ln (p) \] whereQis the quantify of processing tomatoes in milions of tons per year andpis the price in dollars per ton. The demand function is: \[ \ln \left(Q_{d}\right)=2600-0.200 \ln (p)+0.150 \ln \left(p_{1}\right) . \] wherep1is the price of tornato paste (which is what processing tomatoes are used to produce) in dollars per ton. Supposept=$119Determine how the equilerium price and quantity of processing tomatees change if the price of tomato pasise tails by16%. If the price of tomato paste fals by18%, then the equaborium price will by 5 (Enter a numene response using a real number rounded to two decimal places)