Question
In: Economics
A high end steakhouse is the only real restaurant in town. They have a total cost...
A high end steakhouse is the only real restaurant in town. They have a total cost function of ?(?) = ??? + ? ? and face a market demand for steak dinners of ??(?) = ??? − ??. a) Find the monopolist’s profit-maximizing price that they should charge. What profits would they earn?
b) Is the monopolist operating in the short run or the long run? Explain how you know. Illustrate the monopolist’s problem graphically.
c) Suppose the monopolist wants to increase their profitability. Come up with and explain two alternative pricing strategies that they could engage in.
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
Cost Behavior Analysis in a Restaurant: High-Low Cost EstimationAssume a Papa John's restaurant has the...
Cost Behavior Analysis in a Restaurant: High-Low Cost Estimation
Assume a Papa John's restaurant has the following information
available regarding costs at representative levels of monthly
sales: Monthly sales in units 5,000 8,000 10,000 Cost of food sold
$10,000 $16,000 $20,000 Wages and fringe benefits 4,200 4,320 4,400
Fees paid delivery help 1,100 1,760 2,200 Rent on building 1,800
1,800 1,800 Depreciation on equipment 700 700 700 Utilities 300 360
400 Supplies (soap, floor wax, etc.) 200 260 300 Administrative...
Cost Behavior Analysis in a Restaurant: High-Low Cost Estimation Assume a Jimmy John's restaurant has the...
Cost Behavior Analysis in a Restaurant: High-Low Cost
Estimation
Assume a Jimmy John's restaurant has the following information
available regarding costs at representative levels of monthly
sales:
Monthly sales in units
5,000
8,000
10,000
Cost of food sold
$ 10,000
$ 16,000
$ 20,000
Wages and fringe benefits
4,250
4,400
4,500
Fees paid delivery help
1,250
2,000
2,500
Rent on building
1,200
1,200
1,200
Depreciation on equipment
600
600
600
Utilities
500
560
600
Supplies (soap, floor wax, etc.)
150...
Cost Behavior Analysis in a Restaurant: High-Low Cost Estimation Assume a Papa John's restaurant has the...
Cost Behavior Analysis in a Restaurant: High-Low Cost
Estimation
Assume a Papa John's restaurant has the following information
available regarding costs at representative levels of monthly
sales:
Monthly sales in
units
5,000
8,000
10,000
Cost of food sold
$10,000
$16,000
$20,000
Wages and fringe benefits
4,200
4,320
4,400
Fees paid delivery help
1,100
1,760
2,200
Rent on building
1,100
1,100
1,100
Depreciation on equipment
900
900
900
Utilities
800
920
1,000
Supplies (soap, floor wax, etc.)
250
340
400
Administrative...
Cost Behavior Analysis in a Restaurant: High-Low Cost Estimation Assume a Potbelly’s restaurant has the following...
Cost Behavior Analysis in a Restaurant: High-Low Cost
Estimation
Assume a Potbelly’s restaurant has the following information
available regarding costs at representative levels of monthly sales
(meals served):
Monthly sales in units
5,000
7,000
10,000
Cost of food sold
$ 7,500
$10,500
$15,000
Wages and fringe benefits
5,900
5,940
6,000
Fees paid delivery help
6,000
8,400
12,000
Rent on building
3,500
3,500
3,500
Depreciation on equipment
850
850
850
Utilities
600
640
700
Supplies (soap, floor wax, etc.)
400
480...
Cost Behavior Analysis in a Restaurant: High-Low Cost Estimation Assume a Potbelly’s restaurant has the following...
Cost Behavior Analysis in a Restaurant: High-Low Cost
Estimation
Assume a
Potbelly’s restaurant has the following information available
regarding costs at representa-
tive levels of monthly sales:
Monthly sales in units
5,000 8,000 10,000
Cost of food sold
...................................$10,000$16,000$20,000
Wages and fringe benefits
............................4,2004,3204,400
Fees paid delivery help...............................1,100
1,760 2,200
Rent on building ....................................1,100 1,100
1,100
Depreciation on equipment
...........................900900900
Utilities
...........................................8009201,000
Supplies (soap, floor wax, etc.)
........................250340400
Administrative costs.................................1,700
1,700 1,700
Total
.............................................$20,050$27,040
$31,700
Required
a. Identify each cost...
Total costs at a restaurant are listed below: Customers Served Total Cost March 11,660 $ 28,377...
Total costs at a restaurant are listed below:
Customers Served
Total Cost
March
11,660
$
28,377
April
11,456
$
28,309
May
11,988
$
28,485
June
13,300
$
28,918
July
11,720
$
28,397
August
11,206
$
28,227
September
12,000
$
28,489
October
11,691
$
28,387
November
11,839
$
28,436
The restaurant's total cost is a mixed cost that depends on
customers served. The restaurant's management uses the high-low
method to estimate the variable and fixed components of this cost.
If the...
Problem 2. Suppose there is only one yoga studio in town. The marginal cost of producing...
Problem 2. Suppose there is only one yoga studio in
town. The marginal cost of producing yoga sessions is as follows:
MC=12. The yoga studio faces the following market demand function:
Q=20-(1/2)P, and marginal revenue MR=40-4Q.
(6 points) Calculate the profit-maximizing price,
output, and profit for the yoga studio.
(bonus: 3 points) Graph the market demand curve, the
studio's marginal revenue and marginal cost curves, indicating
profit, price, and quantity at the profit-maximizing level of
output.
(4 points) Suppose that...
Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted Output Speedy Pete’s...
Using High-Low to Calculate Predicted Total Variable Cost and
Total Cost for Budgeted Output
Speedy Pete’s is a small start-up company that delivers high-end
coffee drinks to large metropolitan office buildings via a
cutting-edge motorized coffee cart to compete with other premium
coffee shops. Data for the past 8 months were collected as
follows:
Month
Delivery Cost
Number of Deliveries
May
$63,450
1,800
June
67,120
2,010
July
66,990
2,175
August
68,020
2,200
September
73,400
2,550
October
72,850
2,630
November
75,450...
Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted Output Pizza Vesuvio...
Using High-Low to Calculate Predicted Total Variable Cost and
Total Cost for Budgeted Output Pizza Vesuvio makes specialty
pizzas. Data for the past 8 months were collected: Month Labor Cost
Employee Hours January $6,800 420 February $9,699 610 March $7,940
710 April $9,587 670 May $8,290 540 June $7,331 410 July $9,290 630
August $7,250 370 Assume that this information was used to
construct the following formula for monthly labor cost. Total Labor
Cost = $6499 + ($2.03 x Employee...
Currently Sam and Carla have the only taxi services in a small town. Both Sam and...
Currently Sam and Carla have the only taxi services in a small
town. Both Sam and Carla are thinking about discounting their
respective fares by 20% to attract more business.
The possible outcomes of this game are as follows.
First: Sam offers discounts, while Carla does not, which will
result in Sam earning $400 in profit and Carla earning $800 in
profit.
Second: Sam and Carla both offer discounts, which will result in
Sam earning $200 in profit and Carla...
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