Assume you are a single seller of mugs and each buyer’s willingness to pay is below. Assume you incur a cost of $5.00 per unit. (i.e., the marginal cost is constant). How many mugs would you need to sell if you intend to maximise profits, how many mugs would this seller supply to the market, and what price would you charge? Remember, the price has to be the same for each unit sold Buyer Willingness to pay ($) for one mug Bobby 18.00 Jake 16.00 Tara 9.00 Phillip 4.00

Assume you are a single seller of mugs and each buyer’s willingness to pay is below. Assume you incur a cost of $5.00 per unit. (i.e., the marginal cost is constant). How many mugs would you need to sell if you intend to maximise profits, how many mugs would this seller supply to the market, and what price would you charge? Remember, the price has to be the same for each unit sold Buyer Willingness to pay ($) for one mug Bobby 18.00 Jake 16.00 Tara 9.00 Phillip 4.00

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Elvira College has an enrollment of 1,000 students and is located in a small Midwestern town named Johnsonville. Johnsonville has a total population of 2,500 people. The nearest town is 20 miles away. Most of the residents shop locally, but they travel about once a month to the larger city and pick up the large-ticket items. Johnsonville has one fairly good-size supply store named Jameson's Grocery. The only other place in town where you might buy supplies is at the gas station/convenience store located on the edge of town. What competitive situation is Jameson's Grocery experiencing?Competitive Situation:Explanation:
AT&T. It is early in the days of cellular (or mobile) telephony, and you are the price manager for AT&T's cell phone plan. It has been determined that there are two market segments: low-value consumers and high-value consumers. For simplicity, assume that all consumers within a segment are identical. A consumer in the low-value segment has monthly demand (measured in number of minutes) of Q, (p) = 80 - p, and a consumer in the high-value segment has monthly demand of QH (P) = 100 -p, where p is in cents per minute. a. Assume AT&T charges a flat price per minute with no membership fee. Derive the expression for consumer surplus for a low-value consumer and for a high-value consumer as a function of the price, p. Low-value consumer surplus, CS, (p): = High-value consumer surplus, CS, (p) = Show Transcribed Text Assume AT&T's marginal cost is a constant 10 cents per minute. You have decided to use a two-part tariff and must choose the monthly fixed fee f and the per-minute charge p. There…
After graduating, you start work as a management consultant. You are paid $210 per hour. One morning before work, you decide to buy a new car. You know the exact model you want, and you know that in your area the price ranges from $39,000 to $41,000, with the average price you can expect to pay being $40,000. You can choose among hundreds of dealers, but you don't know which dealer will give you the best price. Time is literally money, since every hour you spend searching is an hour you don't get paid. Each visit to a dealer takes an hour. Your expected marginal benefit of another search is the difference between the current dealer's offer and the average price. The first dealer you go to asks $40,500 for the car. Should you accept the price or keep searching? (Keep in mind that each visit to a dealer takes an hour.) Keep searching. Accept the price. Suppose you kept searching, and the next dealer you go to asks $40,150. Do you think you should accept this price or keep searching? O…
Your family business produces a secret recipe salsa and distributes it through both smaller specialty stores and chain supermarkets. The chains have been demanding sizable discounts but you do not want to drop your prices to the specialty stores. When can you legally accommodate the chains without losing profits from the specialty stores?
A Caterpillar tractor one of the largest farm machinery in the world has requested for your services on pricing policy for its product. One of the things the company would like to to know is how much a 5% increase in price is likely to reduce the firm’s sales. What could you require in order to advice?
If your marketing department estimates that the semiannual demand for the highlander is q=150,000. - 1.5 P, what price should you charge in order to maximize revenues from the sales of highlander
When Home depot charges $93 for a children's game, they sell 100 units. When they charge $85, they sell 120 units. If they were to give away the game for free, how many units (Q) would be demanded?
You make delicious cupcakes that you mail to customers across the country. Your cupcakes are so unique and special that you have a great deal of pricing power. Your customers have identical demand curves for your cupcakes, and a representative customer’s demand curve is shown below. (It’s not needed, but the demand curve equation is P=5-0.2Q or Q=25-5P.) Suppose your MC=$1/cupcake, whether you produce lots or just a few cupcakes. To keep things simple, suppose there are no fixed costs, so FC=0.a) Acting as a monopolist, show the standard pricing analysis on the graph below that identifies your profit-mamximing price and quantity for your representative customer. Shade areas representing your profit and CS. (PS and profit are the same here since FC=0). b) (Suppose you offer a quantity discount: first 10 cupcakes at $3 each and any cupcakes over 10 are offered at a discounted price. What discount price will maximize your profit? Show this quantity discount arrangement on your graph…
Explain, how you would set the price in Japan for a product that sells in the US for $10/unit. How, if at all, does that calcuation change if it retails for $100? $10,000? How do you guard against arbitrage, that is, someone buying it cheaply in one country and reselling it in a more expensive market.
The regular air fare between Boston and San Francisco is 419. An airline using planes on this route observes that they fly with an average of 236 passengers. Market research tells the airlines’ managers that each $7 fare reduction would attract, on average, 3 more passengers for each flight. How should they set the fare to maximize their revenue?
You own a toy store located in large suburban mall. Your landlord has raised your rent by 10%. In response, you decide to raise your prices on all of your toys in order to offset the increased cost of rent and maintain your profitability. Under what circumstances would this be a good idea? Explain.
The following chart tells you the willingness to pay (WTP) for generic and custom refrigerators for three types and the number of each type on your market. Each refrigerator costs $200 to make the generic and $250 to make the custom. High Value Medium Value Low Value #of each type 20 30 30 Value for generic 600 500 175 Total value for Custom 750 575 200 If you were only to sell the generic refrigerator, what price should you set? If you were to sell both refrigerator types, what price should you set for the custom refrigerator?