Economics
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IIE 286 PART 1 MicroeconomicAnalysis
Exercises
Technieal Questions
a. -5 b. -1 c. -0.5
There are
in total?
,-trveekday to weekend prices? f. ,4. monopolist sells in two geographically divided Ymarkets, the East and the West. Marginal cost is
constartt at $50 in both markets. Demand and mar- ginal revenue in each market are as follows:
nation than a single lrice elasticities, monopoly price)
revenue is positive, that the price elasticitY ofAn airline
demand for ness rs (who travel on price elasticity ofis -2, whil
Tor vacation (who travel on ) is -5. If the discrimlnates
2. Given pnce elasticities,
-15 -8
(j. -J
Suppose a firm has a constant marginal cost of $10. Ttre current price of the product is $25, and at that price, it is estimated that the price elasticity of demand is -3.0. a. Is the firm charging the optimal price for the
product? Demonstrate how you lcnow. b. Shoutd the price be changed? Ifso, how?
is given by Qn = 6 * P. Assume the marginal a. Find the profit-maximizing price and quantity in
e4ch market. b. In which market is demand more elastic?
CoSt slice is constant at $1.00 and revenue tunctionis6 - 2Q. a. What is and quan-
'a single price?
What profit per c be eamed? tr. Suppose that Sam's
and charge a fixed to sell pizzaatcost
for this option. What quarrtity will a custo at the market price? What is the price Sam's
5. Suppose that demand for product is givenby Qn: I - 5P. Marginal isMR: 2A0 - 8.48, marginal cost is at $20.
costs.
is considering a quantity discourt. The units can be purchased at a Price of
and further units can be purchased at a profit with this method than if the bundled package option were not offered.of $80. How many units will the conflrmer
wee dem
price-discrimi-b. Show that
Os:900- MRs: 454 -
Qw: 700 - MRw: 700 -
ZPE
Qe Pw
2Qw
The first $12c
a.
1. Given each of the whether
h of the following
le company offers two basic
table shows
willing to pay for each
for $50 or thd combined bundted $70, who wil/buy each package?
the company will make a higher
Economics fot Managers, Third Edition, by Paul G. Famham. Published by Prentice Hall. Copyright @ 2014 by Pearson Education, lnc'
are three fans, and
types of users;
a. If the cabie offers any one