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TotsPoses,Inc.,aprofit-maximizingbusiness, istheonlyphotographybusinessintownthatspecializesinportraitsofsmallchildren. Adam,whoownsandrunsTotsPoses,expectstoencounteranaverageofeightcustomersperday,eachwithareservationpriceshowninthefollowingtable. CUSTOMER RESERVATIONPRICE ($PERPHOTO) TOTALREVENUE MARGINAL REVENUE A 50 B 46 C 42 D 38 E 34 F 30 G 26 H 22
TotsPoses,Inc.,aprofit-maximizingbusiness, istheonlyphotographybusinessintownthatspecializesinportraitsofsmallchildren. Adam,whoownsandrunsTotsPoses,expectstoencounteranaverageofeightcustomersperday,eachwithareservationpriceshowninthefollowingtable.
CUSTOMER | RESERVATIONPRICE ($PERPHOTO) | TOTALREVENUE | MARGINAL REVENUE |
A | 50 | ||
B | 46 | ||
C | 42 | ||
D | 38 | ||
E | 34 | ||
F | 30 | ||
G | 26 | ||
H | 22 |
- Ifthetotalcostofeachphotoportraitis$12,howmuchshouldAdamchargeifhemustchargeasingle pricetoallcustomers?At thisprice,howmanyportraitswillAdamproduceeachday?Whatwillbehiseconomicprofit?
- Howmuchconsumersurplusisgeneratedeachdayatthisprice?
- Whatisthesociallyefficientnumberofportraits?
- Adam is very experienced in the business and knows the reservation price of each of hiscustomers. Ifheisallowedtochargeanypricehelikestoanyconsumer,howmanyportraitswillheproduceeachdayandwhatwillhiseconomic profitbe?
- Inthiscase,howmuchconsumer surplusisgenerated eachday?
- SupposeAdamispermittedtochargetwoprices.Heknowsthatcustomerswiththereservationpriceabove$30neverbotherwithcoupons,whereasthosewithareservationpriceof$30orlessalwaysusethem.AtwhatlevelshouldAdam setthelistpriceofaportrait?Atwhatlevelshouldhesetthediscountprice?Howmanyphotoportraitswillhesellateachprice?
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Inflation, Unemployment And Capital Malformations
Authors: Bernard Schmitt, Xavier Bradley, Alvaro Cencini
1st Edition
