Question
In: Economics
Suppose Rialto is the only movie cinema in a small college town, so it is essentially...
Suppose Rialto is the only movie cinema in a small college town, so it is essentially a monopoly for the local movie market. They charge a certain price P for a monthly pass. There is an overall demand curve for movie passes, given by P=900−4Q However, demand in the town has two distinct consumer groups: adults (A) and students (S). The demand for the whole group of adults is given by P=1200−8QA and the inverse demand for students is given by P=400−2QS Assume for simplicity that the constant marginal cost MC(Q) of showing a movie is 20 and there are no additional fixed costs.
(e)Calculate the profit-maximizing quantities and prices for students and adults.
(f) Calculate total costs, revenues, and profits resulting from these values.
(g) Show this in your figures graphically, as well
(h) Compare total profits in (b) with (f). Which is greater. Under what circumstances would the ID machine be worth it (that is, for what values of $M)?
Solutions
Rahul Sunny answered 6 months agoRelated Solutions
Suppose Rialto is the only movie cinema in a small college town, so it is essentially...
Suppose Rialto is the only movie cinema in a small college town,
so it is essentially a monopoly for the local movie market. They
charge a certain price P for a monthly pass. There is an overall
demand curve for movie passes, given by P=900−4Q However, demand in
the town has two distinct consumer groups: adults (A) and students
(S). The demand for the whole group of adults is given by
P=1200−8QA and the inverse demand for students is given...
QuadPlex Cinema is the only movie theater in Idaho Falls. The nearest rival movie theater, the...
QuadPlex Cinema is the only movie theater in Idaho Falls. The
nearest rival movie theater, the Cedar Bluff Twin, is 35 miles away
in Pocatello. Thus QuadPlex Cinema possesses a degree of market
power. Despite having market power, QuadPlex Cinema is currently
suffering losses. In a conversation with the owners of QuadPlex,
the manager of the movie theater made the following suggestions:
“Since QuadPlex is a local monopoly, we should just increase ticket
prices until we make enough profit.”
a....
Suppose that there are only three people that live in a (very) small town: Eric, Greg,...
Suppose that there are only three people that live in a (very)
small town: Eric, Greg, and Katie. The town is thinking of building
a park which you can assume is a public good for these three
individuals in the town. Based on the individuals’ demand schedules
for the park, which are given below, calculate and graph the social
marginal benefit curve for the park.
Eric’s Demand
Greg’s Demand
Katie’s Demand
Price per Acre
Number of Acres
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Suppose there are only two driveway paving companies in a small town, Asphalt Inc. and Blacktop...
Suppose there are only two driveway paving companies in a small
town, Asphalt Inc. and Blacktop Bros. The inverse demand curve for
paving services is P = 1, 600 ? 20Q, where quantity is measured in
the number of pave jobs per month and price is measured in dollars
per job. The two firms have an identical marginal cost of $400 per
driveway.
(a) If the two firms collude and act like a monopoly, splitting
the work and profits evenly,...
The demand function for a truckload of firewood in a small town with a college is...
The demand function for a truckload of firewood in a small town
with a college is Q = 200 - 1.5p for non-students and Q = 200 - p
for students, where p is the price of firewood, in $/truckload. For
the town as a whole, including the students, the slope of the
inverse demand curve to the right of the kink is ? A. -1 B. -2 C.
-.5 D. -.4
4. Derek is the owner of the only movie theater in town. By hiring several well-trained...
4. Derek is the owner of the only movie theater in town. By
hiring several well-trained economists, Derek learns that the
people watching movies after 8 P.M. have a much higher average
willingness to pay than people watching at 5 P.M. The costs of
showing a movie are identical at 5 P.M. and 8 P.M. To maximize his
profit, what should Derek do? Give him some specific advice,
including drawing him a diagram or two. (Derek can get his
economists...
Derek is the owner of the only movie theater in town. By hiring several well-trained economists,...
Derek is the owner of the only movie theater in town. By hiring
several well-trained economists, Derek learns that the people
watching movies after 8 P.M. have a much higher average willingness
to pay than people watching at 5 P.M. The costs of showing a movie
are identical at 5 P.M. and 8 P.M. To maximize his profit, what
should Derek do? Give him some specific advice, including drawing
him a diagram or two. (Derek can get his economists to...
Please use paper to do thankyou so much !!!!!! Suppose two small-town video stores, store A...
Please use paper to do thankyou so much !!!!!!
Suppose two small-town video stores, store A and store B,
compete. The two stores collude and agree to share the market
equally. If neither store cheats on the agreement, each store will
make $2,500 a day in economic profits. If only one store cheats,
the cheater will increase its economic profits to $4,000 and the
store that abides by the agreement will incur an economic loss of
$1,000. If both firms...
2. The demand function for a truckload of firewood for college students in a small town...
2. The
demand function for a truckload of firewood for college students in
a small town is Qc = 400 - p. It is sometimes convenient to rewrite
a demand function with price on the left side. We refer to such a
relationship as the inverse demand function. Therefore, the inverse
demand function for college students is p = 400 - Qc. The demand
function for other town residents is Qr = 400 - 2p.
• What
is the inverse...
Consider a firm who is the only employer in a small town (a labour monopsony). It...
Consider a firm who is the only employer in a small town (a
labour monopsony). It faces an international price ? > 0 for
each unit of output that it produces, its production function is ?
= ? ? where ? > 0, and the labour supply is given by ?(?) = ? ∙
? where ? > 0. Intuitively, the firm’s production function is
concave (when ? < 1), linear (when ? = 1), or convex (when ?
>...
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