Calculate the price, quantity, and profit if:

Calculate the price, quantity, and profit if:

Question 1

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 2

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

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formCheckList.addElement( new Check_Answer( {ref_label:”4″, name:”fib_plus-variable-k-_192195630_1″} ) );

84

5.00

30.00

54.00

formCheckList.addElement( new Check_Answer( {ref_label:”4″, name:”fib_plus-variable-b-_192195630_1″} ) );

formCheckList.addElement( new Check_Answer( {ref_label:”4″, name:”fib_plus-variable-l-_192195630_1″} ) );

91

7.00

5.00

35.00

2.00

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formCheckList.addElement( new Check_Answer( {ref_label:”4″, name:”fib_plus-variable-c-_192195630_1″} ) );

formCheckList.addElement( new Check_Answer( {ref_label:”4″, name:”fib_plus-variable-m-_192195630_1″} ) );

96

5.00

5.00

40.00

0.00

formCheckList.addElement( new Check_Answer( {ref_label:”4″, name:”fib_plus-variable-w-_192195630_1″} ) );

formCheckList.addElement( new Check_Answer( {ref_label:”4″, name:”fib_plus-variable-d-_192195630_1″} ) );

formCheckList.addElement( new Check_Answer( {ref_label:”4″, name:”fib_plus-variable-n-_192195630_1″} ) )

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