Question

The market demand for a gallon of mineral water is P = 10 – 0.05Q. The...

  1. The market demand for a gallon of mineral water is P = 10 – 0.05Q.
    1. The producer wants to produce where the elasticity of demand is unity.  What price should she change and what quantity should be sold to achieve that goal? (please use graph to explain!!!)
    2. Some of the management team are arguing for a price reduction to sell more water and increase income.  Is this a good suggestion?
    3. If there are no costs to selling mineral water, what price should a profit maximizer charge?
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. Demand for gasoline in a small town is given by P=5-0.05Q where P is in...
1. Demand for gasoline in a small town is given by P=5-0.05Q where P is in dollars and Q is in 1000s of gallons per week. If there are only 3 gas stations in very close proximity to each other in the center of town, and consumers view them as perfect substitutes, answer the following questions: a) If all firms share a constant MC=$2 per gallon, what will be the equilibrium price and quantity in the market? b) Suppose that...
Suppose the equilibrium price of gasoline is $3 per gallon. a. Using the demand and supply...
Suppose the equilibrium price of gasoline is $3 per gallon. a. Using the demand and supply graph, draw this equilibrium in the space below. Make this graph large, it will be used for future questions. b. Now suppose the government imposes a binding price ceiling on this market. Identify a value for this price ceiling that would be binding and show it on the graph. Graphically show whether excess demand or excess supply would result. c. With the price ceilings,...
Suppose the average student’s demand for a team's football tickets is as follows: Price $20 $14...
Suppose the average student’s demand for a team's football tickets is as follows: Price $20 $14 $10 $7 $5 Quantity 1 2 3 4 5 a. If this team is a profit maximizer and it can only sell single game tickets, what price will they charge, how many tickets will the average student buy, and how much profit will the college make per student (assuming MC = 0)? b. If this team is a profit maximizer but instead sells season-tickets...
1. Consider the following demand and supply functions for a good or service: Qd = 400...
1. Consider the following demand and supply functions for a good or service: Qd = 400 - 5P and Qs= 3P. a) Graph the supply and demand functions in the typical manner with price per unit (P) on the Y-axis and quantity on the X-axis. Make sure to clearly mark X-intercept and Y-intercept on the graph. b) What is the slope of each line? Show your calculations. c) What is the equilibrium price and quantity? Show your calculations. Show the...
Suppose demand for apartments in Honolulu is P=6000-0.5q and supply is P=0.25q. a. Derive the equilibrium...
Suppose demand for apartments in Honolulu is P=6000-0.5q and supply is P=0.25q. a. Derive the equilibrium price and quantity for apartments. Show on a graph. Calculate the producer and consumer surplus. b. If the city of Honolulu passes a rent control, forcing a rent (or price) ceiling equal to $1600, what is the quantity supplied, quantity demanded, and the shortage? Calculate the new consumer surplus, producer surplus, and deadweight loss, and show these on your graph. c. If a black...
Suppose demand for apartments in Honolulu is P=6600-0.5q and supply is P=0.25q. Derive the equilibrium price...
Suppose demand for apartments in Honolulu is P=6600-0.5q and supply is P=0.25q. Derive the equilibrium price and quantity for apartments. Show on a graph.  Calculate the producer and consumer surplus. If the city of Honolulu passes a rent control, forcing a rent (or price) ceiling equal to $1800, what is the quantity supplied, quantity demanded, and the shortage?  Calculate the new consumer surplus, producer surplus, and deadweight loss, and show these on your graph. If a black market develops after the rent...
The demand for mysterious good X in Lansing is Q = 12 ? P, where P...
The demand for mysterious good X in Lansing is Q = 12 ? P, where P is the price of good X per pound and Q is the quantity demanded in pounds. The marginal cost of producing the good is $2 per pound. There is no fixed cost of producing the good. There is only one firm, Alice, who can produce the good. Alice cannot price discriminate against any consumer. (a) What is the marginal revenue curve? (b) What is...
If the elasticity of demand for good x is minus 0.5 at the price P= $10...
If the elasticity of demand for good x is minus 0.5 at the price P= $10 and quantity Q = 8000, what is It the value of the parameter b if the demand function is of the form Q = A + bP? What is the value of the parameter A? At what price and quantity is total consumer expenditure for good x at its maximum? At price = $10, quantity = 8000 and Income(M) = $1000, the income elasticity...
2. The market for a good has an inverse demand curve of p = 40 –...
2. The market for a good has an inverse demand curve of p = 40 – Q and the costs of producing the good are defined by the following total cost function: TC = 100 + 1.5Q2. a. If this good is produced in a monopoly market, provide a graph of the demand curve, marginal revenue curve and marginal cost curve. Then calculate the equilibrium output and price . b. Calculate the price elasticity of demand at the equilibrium price...
2. The market for a good has an inverse demand curve of p = 40 –...
2. The market for a good has an inverse demand curve of p = 40 – Q and the costs of producing the good are defined by the following total cost function: TC = 100 + 1.5Q2. a. If this good is produced in a monopoly market, provide a graph of the demand curve, marginal revenue curve and marginal cost curve. Then calculate the equilibrium output and price. b. Calculate the price elasticity of demand at the equilibrium price and...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT