Problem Set

Question 1

Suppose your company runs a shuttle business of a hotel to and from the local airport. The costs for different customer loads are:

1 customer: $30

2 customers: $32

3 customers: $35

4 customers: $38

5 customers: $42

6 customers: $48

7 customers: $57

8 customers: $68.

What are your marginal costs for each customer load level?

Q

TC

MC

Total Rev

Profit

1

30

10

-20

2

32

Blank 1

20

-12

3

35

Blank 2

30

-5

4

38

Blank 3

40

2

5

42

Blank 4

50

8

6

48

Blank 5

60

12

7

57

Blank 6

70

13

8

68

Blank 7

80

12

Question 2

Suppose your company runs a shuttle business of a hotel to and from the local airport. The costs for different customer loads are:

1 customer: $30

2 customers: $32

3 customers: $35

4 customers: $38

5 customers: $42

6 customers: $48

7 customers: $57

8 customers: $68.

If you are compensated $10 per ride, what customer load would you choose?

Marginal Cost is the change in costs due to the additional customer. Since marginal revenue is the price of $10, you will serve customers up to the point where MR ≥ MC or you will serve 7 customers.

Marginal Cost is the change in costs due to the additional customer. Since marginal revenue is the price of $10, you will serve customers up to the point where MC < MR or you will serve 10 customers.

Marginal Cost is the change in costs due to the additional customer. Since marginal revenue is the price of $10, you will serve customers up to the point where MC< MR or you will serve 9 customers.

Marginal Cost is the change in costs due to the additional customer. Since marginal revenue is the price of $10, you will serve customers up to the point where MC = MR or you will serve 7 customers.

Question 3

Suppose the number of firms you compete with has recently increased. You estimated that as a result of the increased competition, the demand elasticity has increased from 2 to 3, i.e., you face more elastic demand. You are currently charging $10 for your product. If demand elasticity is -3, you should charge [x].

Question 4

An amusement park, whose customer set is made up of two markets, adults and children, has developed demand schedules as follows:

The marginal operating cost of each unit of quantity is $5. Because marginal cost is a constant, so is average variable cost. Ignore fixed costs. The owners of the amusement part want to maximize profits.

Price ($)

Quantity

Adults

Children

5

15

20

6

14

18

7

13

16

8

12

14

9

11

12

10

10

10

11

9

8

12

8

6

13

7

4

14

6

2

Calculate the price, quantity, and profit if: The amusement park charges a different price in the adult market

Please express your answers for Price and Profit in whole dollars (i.e.10.00)

Please use whole numbers for Quanitity (i.e. 10, 27, 4)

Price

Quantity

Total

Revenue

Marginal

Revenue

Marginal

Cost

Total

Cost

MR-MC

Profit

Blank 1

6

84

5

30

34

13

Blank 2

91

7

5

35

2

56

12

8

96

5

5

40

0

Blank 3

Blank 4

9

99

3

5

45

-2

54

10

Blank 5

100

1

5

50

-4

50

9

11

99

-1

5

55

-6

Blank 6

Blank 7

12

96

-3

5

60

-8

36

7

Blank 8

91

-5

5

65

-10

26

6

14

84

-7

5

70

-12

Blank 9

5

15

75

-9

5

75

-14

0

Question 5

An amusement park, whose customer set is made up of two markets, adults and children, has developed demand schedules as follows:

The marginal operating cost of each unit of quantity is $5. Because marginal cost is a constant, so is average variable cost. Ignore fixed costs. The owners of the amusement part want to maximize profits.

Price ($)

Quantity

Adults

Children

5

15

20

6

14

18

7

13

16

8

12

14

9

11

12

10

10

10

11

9

8

12

8

6

13

7

4

14

6

2

Calculate the price, quantity, and profit if: The amusement park charges a different price in the child’s market

Please express your answers for Price and Profit in whole dollars (i.e.10.00)

Please use whole numbers for Quanitity (i.e. 10, 27, 4)

Price

Quantity

Total

Revenue

Marginal

Revenue

Marginal

Cost

Total

Cost

MR-MC

Profit

14

2

28

5

10

Blank 1

13

Blank 2

52

12

5

20

7

32

Blank 3

6

72

10

5

30

5

42

11

8

88

8

5

40

3

48

10

10

100

6

5

50

1

Blank 4

9

Blank 5

108

4

5

60

-1

48

Blank 6

14

112

2

5

70

-3

42

7

16

112

0

5

80

-5

Blank 7

6

Blank 8

108

-2

5

90

-7

18

Blank 9

20

100

-4

5

100

-9

0

Question 6

An amusement park, whose customer set is made up of two markets, adults and children, has developed demand schedules as follows:

The marginal operating cost of each unit of quantity is $5. Because marginal cost is a constant, so is average variable cost. Ignore fixed costs. The owners of the amusement part want to maximize profits.

Price ($)

Quantity

Adults

Children

5

15

20

6

14

18

7

13

16

8

12

14

9

11

12

10

10

10

11

9

8

12

8

6

13

7

4

14

6

2

Calculate the price, quantity, and profit if: The amusement park charges the same price in the two markets combined

Please express your answers for Price and Profit in whole dollars (i.e.10.00)

Please use whole numbers for Quanitity (i.e. 10, 27, 4)

Price

Quantity

Total

Revenue

Marginal

Revenue

Marginal

Cost

Total

Cost

MR-MC

Profit

14

8

112

5

40

72

Blank 1

11

143

10.33

5

55

5.33

88

12

Blank 2

168

8.33

5

70

3.33

98

11

17

187

6.33

5

85

1.33

Blank 3

Blank 4

20

200

4.33

5

100

-0.67

100

9

Blank 5

207

2.33

5

115

-2.67

92

8

26

208

0.33

5

130

-4.67

Blank 6

Blank 7

29

203

-1.67

5

145

-6.67

58

6

Blank 8

192

-3.67

5

160

-8.67

Blank 9

5

35

175

-7.67

5

190

-12.67

-38

Question 7

Explain the difference in the profit realized under the two situations (the price in each market or in the two markets combined.)

Make sure you include the profit with and without price discrimination in your answer.

Question 8

Time Warner could offer the History Channel (H) and Showtime (S) individually or as a bundle of both.

Suppose the reservation prices of customers 1 and 2 (the highest prices they are willing to pay) are presented in the boxes below.

The cost to Time Warner is $1 per customer for licensing fees.

Preferences

Showtime

History Chanel

Customer 1

9

2

Customer 2

3

8

Should Time Warner bundle or sell separately? Your answer needs to include the unbundled and bundled profits.

Question 9

Suppose Time Warner could sell Showtime for $9, and History channel for $8, while making Showtime-History bundle available for $13. Should it use mixed bundling. i.e., sells products both separately and as a bundle?

Your answer must include the profit with mixed bundling.

You can leave a response, or trackback from your own site.

CLICK ORDER NOW TO GET A CUSTOMIZED PAPER ON THIS TOPIC JUST FOR YOU!! 0%PLAGIARISM 100% ORIGINAL PAPER

12 Responses to “Problem Set”

  1. 244069 127327This really is a excellent weblog. Keep up all the work. I too enjoy to weblog. This is excellent every person sharing opinions 149417

  2. 60900 148112Right after I initially commented I clicked the -Notify me when new feedback are added- checkbox and now each time a remark is added I get four emails with the same comment. Is there any method you will be able to take away me from that service? Thanks! 920065

  3. 안전공원 says:

    831128 256469Hi, you used to write superb articles, but the last several posts have been kinda boring I miss your super writing. Past several posts are just just a little out of track! 631040

  4. CI-CD says:

    256924 48511Wow genuinely glad i came across your internet site, i??ll be certain to pay a visit to back now i??ve bookmarked it??. 32593

  5. 982716 726826There is noticeably big funds to comprehend about this. I suppose you made certain nice points in attributes also. 80280

  6. 402803 540588Just wanna input on couple of common items, The web site layout is perfect, the articles is really superb : D. 882142

  7. 397842 688859Normally I do not read write-up on blogs, but I wish to say that this write-up extremely forced me to try and do so! Your writing style has been surprised me. Thanks, quite nice post. 267032

  8. 972267 419430Thanks for the post. I like your writing style – Im trying to start a weblog myself, I feel I may possibly read thru all your posts for some suggestions! Thanks once a lot more. 946807

  9. 571211 410423Glad to be one of several visitants on this awful web site : D. 849240

  10. 9484 158328Cheapest speeches and toasts, as well as toasts. probably are designed building your personal at the party and will be most likely to turn into witty, humorous so new even. best man toast 808996

  11. 킹스포커 says:

    802474 691536You ought to join in a tournament very first with the greatest blogs on the web. I will recommend this internet site! 928976

  12. 831721 516262Music began playing any time I opened this web site, so frustrating! 979941

Leave a Reply

Powered by WordPress | Designed by: buy backlinks | Thanks to webdesign berlin, House Plans and voucher codes