Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider a small firm that provides tours to visitors in a large city. The market for tours is perfectly competitive in the city. The firm

Consider a small firm that provides tours to visitors in a large city. The market for tours is perfectly competitive in the city. The firm has no fixed costs, so if it does not provide any tours in a day, it has a cost of zero. The daily cost of providing tours is listed in the table below. Cost of providing tours Total Tours Cost of Providing Tours 1 $27 2 $51 3 $72 4 $90 5 $105 6 $117 7 $126 8 $138 9 $153 10 $171 11 $192 12 $216 1st attempt Part 1 (1 point) Suppose the price of a tour is $21. If the firm is a profit-maximizing firm, it would provide a number of tours such that its marginal cost equals $ . Part 2 (2 points) The lowest number of tours that the firm could provide, for the marginal cost to equal what you answered in Part 1, is units. The highest number of tours that the firm could provide, for the marginal cost to equal what you answered in Part 1, is units. Part 3 (1 point) You may assume that the tour provider will provide a tour even if it breaks even

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essays In Our Changing Order

Authors: Thorstein Veblen

1st Edition

1351311425, 9781351311427

More Books

Students also viewed these Economics questions