Wonderland is the only amusement park in a town. Suppose its marginal cost of providing a ride is constant at $3 and an average visitor's demand for rides is given by D(p) = 32 - 4p. If Wonderland wants to maximize its profit using a two-part tariff, how much should it charge for entry per person and how much should it charge for each ride?
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- Suppose a monopoly market has a demand function in whichquantity demanded depends not only on market price (P) butalso on the amount of advertising the firm does (A, measuredin dollars). The specific form of this function isQ =(20 - P2) (1 + 0.1A - 0.01A2).The monopolistic firm’s cost function is given byC = 10Q + 15 + A.a. Suppose there is no advertising (A = 0). What outputwill the profit-maximizing firm choose? What market price will this yield? What will be the monopoly’sprofits?b. Now let the firm also choose its optimal level of advertising expenditure. In this situation, what output levelwill be chosen? What price will this yield? What will thelevel of advertising be? What are the firm’s profits in thiscase? Hint: This can be worked out most easily by assuming the monopoly chooses the profit-maximizing pricerather than quantity.Suppose an airline sells air tickets to two types of customer – business travelersand vacation travelers. Their estimated demand elasticities are -2.5 and -4.0respectively.Suppose the marginal cost is constant at $240, and the services provided to thetwo types of customer are similar. Calculate the fares the airline should charge on the air tickets sold to therespective types of customers. Show your calculations.Website Profit The latest demand equation for your gaming website, www.mudbeast.net, is given by q = -200x + 1000 where q is the number of users who log on per month and x is the log-on fee you charge. Your Internet provider bills you as follows. Site maintenance fee: $30 per month High-volume access fee: $0.40 per log-on Find the monthly cost as a function of the log-on fee x. C(x) = Find the monthly profit as a function of x. P(x) = %3D Determine the log-on fee you should charge (in dollars) to obtain the largest possible monthly profit. x = $ per log-on What is the largest possible monthly profit (in dollars)? $
- In some cities, Uber has a monopoly on ride-sharing services. In one of these cities, the demand curve on weekdays is given by P = 50 - Q. However, during weekend nights, or surge hours, the demand for rides increases dramatically and the new demand curve is P = 100 - Q. Assume that the marginal cost and the total fixed cost are both zero. 1. Determine the profit maximizing price during weekdays and during surge hours. 2. Determine the profit maximizing price during weekdays and during surge hours if MC = 10 instead of zero. 3. Draw a graph showing the demand, marginal revenue, and marginal cost curves during surge hours from part (2), indicating the profit maximizing price and quantity. Determine Uber’s profit and the DWL during surge hours, and show them on a graph. ANSWER ALL PARTS THANKSWebsite Profit The latest demand equation for your gaming website, www.mudbeast.net, is given by q=-100x + 1500 where q is the number of users who log on per month and x is the log-on fee you charge. Your Internet provider bills you as follows. Site maintenance fee: $50 per month High-volume access fee: $0.50 per log-on Find the monthly cost as a function of the log-on fee x. C(x): = X Find the monthly profit as a function of x. P(x) = Determine the log-on fee you should charge (in dollars) to obtain the largest possible monthly profit. x = $ per log-on What is the largest possible monthly profit (in dollars)? $Suppose that the demand for a product is given by the following demand function: Q = 500 -3P A. To sell 200 units, what price should you charge?
- AgK rents out computing services to agricultural producers. The charge a fixed rental payment for the right to unlimited computing at a rate of P USD per minute. There are two types of potential users: 100 farmers and 100 ranchers. Each farmer demand is given by Qf = 20 - Pf, and each rancher's demand is given by Qr = 25 - Pr, where Q is in 1000 minutes per month and P is in USD per minutes. The marginal cost is 5 USD per minute. Suppose that you could separate farmers and ranchers. For ranchers, the optimal rental fee is A) 5 B) 200,000 C) 500 D) 0Suppose an airline sells air tickets to two types of customer – business travelersand vacation travelers. Their estimated demand elasticities are -2.5 and -4.0respectively.Suppose the marginal cost is constant at $240, and the services provided to thetwo types of customer are similar.a. Based on the given information, explain with TWO practical reasons whether theairline should charge a higher price on business travelers or vocational travelers.Explain without calculation.a. b. If a firm's the price elasticity of demand (Eg) to be-3.5 and marginal cost (MC) is $15. Using the mark-up rule, what is the optimal price for the firm to charge? If the price elasticity of demand (En) changes to -3.0, and MC is still $15. Use the mark-up rule to find the new optimal price for the firm to charge? What is the defining feature of a Pure Selling Problem and what impact does it have one the firm's goal to maximize profit?
- The price elasticity of demand for a monopolistic firm's product is given by 0.3 p 8-0.6 p najp == (a) If the firm raises their price from po = $64.00 to p₁= $65.00, then the demand for their good will... [Select] (b) The firm's marginal revenue is maximized when they set their price to... [Select]An international airline in Ghana ,Emirates ,estimates that the price elasticity of demand for business who travellers weekdays is -3,while that for vacation travellers who travel on weekends is -5 .if the aim of the airline is to maximise profit what pricing strategy will you recommend to the airline and why?You are a consultant who is advising a monopoly on the optimal pricing strategy. Your analysis has yielded the following information. • The marginal cost (MC) is $3. • The demand equation is P = 90 - 3Q . The total cost (TC) is given by 35+ 3Q The marginal revenue (MR) is given by 90 - 6Q Based on this information, answer the following questions. Show FULL calculations! (a) Following the concepts of profit maximization, what is the profit maximizing quantity for this monopoly? (b) Following the concepts of profit maximization, what is the profit maximizing price for this monopoly? (c) Following the concepts of profit maximization, what is the monopoly's profit at the profit maximization point?