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A baseball club has several monopolies. Two of them are: "good" seats and "nosebleed" seats. Market demand for each good is as follows:Good Seats: P = 100 - 2Q
Nosebleeds: P = 30 - 2Q
With the stadium built, payers paid, and the other costs of playing baseball game incurred, the marginal cost of admitting an additional customer is essentially zero (MC=0). Everything else is "sunk" or fixed costs, TC = 1000.a. What are the total revenue (TR) functions for the two types of seats?b. Write the overall profit function.c. Maximize each TR function to find the optimal quantity of tickets in each market.d. What price will they charge in each market to sell the optimal numbers of tickets.e. What is the profit when they sell tickets at the above prices?f. What is Consumer Surplus (area under demand curve and above the price) in each market? Would overall welfare (profit plus Consumer Surplus) be higher if the they charged prices equal to MC?g. If the they priced tickets at marginal cost (free!) they would incur a loss. Suggest a pricing regulation that government might enact to increase Consumer Surplus without driving the team out of business.h. Is the team a natural monopoly? I.e., if another firm entered the market with the same fixed costs and both teams split both markets, neither would make a profit.
What are consumption and saving in each period, assuming no borrowing constraints? What happens if the consumer faces a borrowing constraint that prevents her from borrowing?
Assume that an individual consumes two goods, X and Y. The total utility (assumed measurable) of each good is independent of the rate of consumption of other good. The price of X and Y are respectively $40 and $60.
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American Linen is a firm that has multiple salespersons. In 2008, it changed the compensation method for its sales force, moving from a system of fixed wages to one of base wage plus commission. As a result, American Linen's total revenue from sal..
Suppose that a new government is elected that wants tokeep out the poor. It declares that the minimum rent that can be charged is $2500 per month. If the government can enforce that price floor, will there be a surplus or ashortage? Of how many un..
Susan is considering buying a 2011 Smart ForTwo costing $21,635 and finds that the retaining values of the vehicle over next five years are as follows: Percent of the total value retained after 36 months: 28% Percent of the total value retained aft..
Suppose a random experiment can be represented by 2 sets of events ,Ai and Bj, with each pair of sub events (A1 and A2, and B1, and B2) being mutually exclusive and collectively exhaustive.
Lenders perceive that you are risky, so you must pay 12 percent annual interest to borrow from one of them. You only receive 6 percent on funds you have deposited in the bank. Do the opportunity costs of borrowing and using your own funds differ.
Suppose that the inverse demand for shale gas is given by p = 400 - 2q. The private marginal cost of producing shale gas is PMC = 100 + q. Suppose that in order to produce shale gas at the PMC given above, the oil and gas (O&G) companies (that pro..
On the basis of the information regarding the risk involved in the two projects, you come up with the following probability distributions for the projects:
Plant B was constructed 2 months ago; it has a pollution abatement cost of 10c2. Assume that neither plant is initially engaging in pollution abatement. The per unit benefit to a unit of pollution abatement is constant at $1500. Unless told otherw..
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