Five fishermen live in a village and have no other employment or income earning possibilities besides fishing. They each own a boat that is suitable for fishing, but does not have any resale value. Fish are worth $5 per pound and the marginal cost of operating the boat is $500 per month. They all fish in a river next to the village, and they have determined that when there are more of them out there on the river fishing, they each catch less fish per month according to the following schedule: Boats 1 2 3 4 5 Assume that the fishermen band together and act as a group. Fill the blank cells in the following table: Boats Total Fish Caught Marginal Increase of Fish Marginal Revenue 200 1 2 3 4 Fish Caught per Boat (pounds) 200 190 175 155 130 5 525 Therefore, the socially optimal number of boats is 180 $ .Hint: Do not use thousands separators. $ $

Five fishermen live in a village and have no other employment or income earning possibilities besides fishing. They each own a boat that is suitable for fishing, but does not have any resale value. Fish are worth $5 per pound and the marginal cost of operating the boat is $500 per month. They all fish in a river next to the village, and they have determined that when there are more of them out there on the river fishing, they each catch less fish per month according to the following schedule: Boats 1 2 3 4 5 Assume that the fishermen band together and act as a group. Fill the blank cells in the following table: Boats Total Fish Caught Marginal Increase of Fish Marginal Revenue 200 1 2 3 4 Fish Caught per Boat (pounds) 200 190 175 155 130 5 525 Therefore, the socially optimal number of boats is 180 $ .Hint: Do not use thousands separators. $ $

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter13: Positive Externalities And Public Goods

Section: Chapter Questions

Problem 23P: HighFlyer Airlines wants to build new airplanes with greatly increased cabin space. This will allow...

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HighFlyer Airlines wants to build new airplanes with greatly increased cabin space. This will allow HighFlyer Airlines to give passengers more comfort and sell more tickets at a higher price. However, redesigning the cabin means rethinking many other elements of the airplane as well, like engine and luggage placement, and the most efficient shape of the plane for moving through the air. HighFlyer Airlines has developed a list of possible methods to increase cabin space, along with estimates of how these approaches would affect the planes operating costs and ticket sales. Based on these estimates, Table 13.5 shows the value of R, how much should the firm invest in R on top of the private return; that is, an R private return to HighFlyer Airlines would have a 9 social return. How much investment is socially optimal at the 6 interest rate?
Suppose that the fish processor could use a different production method that involves recycling water. This would reduce the pollution in the lake to levels safe for recreation, and the boat tour would no longer be affected. If the fish processor uses the recycling method, then the fish processor's economic profit is $1,300 per week, and the boat tour's economic profit is $1,900 per week. If the fish processor does not use the recycling method, then the fish processor's economic profit is $1,600 per week, and the boat tour's economic profit is $1,100 per week. These figures are summarized in the following table. Complete the following table by computing the total profit (the fish processor's economic profit and the boat tour's economic profit combined) with and without recycling. Action Profit Fish Processor Boat Tour Total (Dollars) (Dollars) (Dollars) No Recycling 1,600 1,100 Recycling 1,300 1,900 Total economic profit is highest…
You run a donut shop. You have two types of customers – early morning, and late morning. Below are the maximum prices a 6 am customer and a 10 am customer are willing to pay for a cup of coffee, a donut, and a coffee/donut bundle. There are 100 customers in each group per day. 6 am customer 8 am customer Coffee 0.70 0.60 Donut 0.50 1.00 Bundle 1.20 1.60 Your marginal cost of coffee is $0.10. Your marginal cost of a donut is $0.40. Your marginal cost of a bundle is $0.50. Is pricing the products separately more profitable than bundling the two products? If so, how should you price your bundle? Show all your computations.
Quantity (in gallons) Total Price Revenue $8 $0 50 7 350 100 600 150 750 200 4 800 250 3 750 300 600 350 1 350 400 Imagine a small town in a remote area where only two residents, Maria and Miguel, own dairies that produce milk. Their respective dairies are equal in size. Each week Maria and Miguel work together to decide how many gallons of milk to produce and what price to charge. To keep things simple, suppose that Maria and Miguel can produce as much milk as they want without cost so that the marginal cost is zero and there are no fixed costs. The weekly town demand schedule and total revenue schedule for milk is shown in the table above. Suppose the town enacts new antitrust laws that prohibit Maria and Miguel from operating as a cartel. Assuming that each producer can only modify quantity in increments of 50, which of the following is consistent with the Nash equilibrium for this scenario? Maria will charge a price of $5 for each gallon. Miguel will sell 100 gallons. Milk will…
QUESTION 10 Mary is the only one in town who can make red velvet cupcakes. Each cupcake costs her $4 to make (i.e. her marginal cost is constant at $4 per cupcake). Currently, Mary charges $4.50 for a cupcake. Below is the table of potential prices she could charge and the corresponding quantities. Price ($/cupcake) 6.50 6.00 5.50 5.00 4.50 4.00 Quantity (cupcakes) 30 42 56 72 92 105 Answer the following questions: a. What is Mary's marginal revenue when the price is $4.50 per cupcake? Answer to the nearest two decimal places. $ per cupcake. b. At a price of $4.50 per cupcake, should Mary decrease or increase the number of cupcakes sold to maximise profit? Type D for Decrease or I for Increase. c. Calculate Mary's profit-maximising quantity of cupcakes to sell. Answer to the nearest whole number (with no decimal places). cupcakes.
Melanie and Oli are competing Pacific halibut fishers. Both have been allocated ITQs that limit their catch to 1,000 tons of Pacific halibut each. Melanie's cost per ton is $36; Oli's cost per ton is $40. If the market price of Pacific halibut is $48 per ton, what is the minimum amount per ton that Melanie would have to offer Oli to convince him to sell Melanie his ITQs? Multiple Choice $6. $8. $12. $4.
Your niece owns a different type of chicken restaurant. She specializes in chicken and noodles and chicken pot pie. Her pot pie is the better seller. However, when its cold outside, the chicken and noodles is the better seller. She goes through about 100 chickens every two days. It takes about 60 chickens to make 600 pot pies. The other 40 chickens are used to make about 320 chicken and noodle dishes. When its cold outside it takes 70 chickens to meet the demand for chicken and noodles. Construct a production possibilities model that graphically illustrates this problem.
Henry and Harper decide to open a concession stand next to a city park that has a number of sports fields. They each contribute $1,000 and rent a small food trailer and buy supplies. They anticipate being busy, so they hire James to help out and pay him weekly. The first summer, they make $12,000 and incur $6,000 in costs. How much profit is made and who will receive it?
Juan Valdez, a coffee farmer in Colombia, sells his coffee to Cafe Emporium, a U.S. firm which specializes in gourmet coffee blends. a. What must be true of this arrangement? While this arrangement is good for Juan, he would be better off if the government had negotiated the contract for him because the government could have gotten a better price. Juan and other farmers in Colombia who make such transactions are made better off as a result. Juan believes he is better off with this contract, but in reality, the wealthy American buyer is taking advantage of Juan's naiveté. When Juan and other farmers in Colombia sell their coffee beans to foreigners, their nation as a whole gains in the long run, as countries gain from trade.
A hotel rents rooms to customers by the night. The hotel determines that if it sets the price of the room to be $160 per night, 145 rooms will be rented. In order to rent 195 rooms, it must lower the price to $110 per night. If the hotel sets the price to be $110 per night, what is the marginal revenue? The marginal revenue is $ per room. (Round answer to nearest dollar. If more than one answer, separate with a comma.)
Alec and Ellie are the only detectives in the town of Broadchurch. Assume efficient production. Each has 10 hours in a day to allocate between conducting interviews and completing paperwork. They work independently and have to decide whether they will trade paperwork files for interviews. Alec takes 33 hours to complete one interview or 38 hours to complete one file of paperwork. Ellie takes 6 hours to complete one interview or 20 hours to complete one file of paperwork. Consider the price of 1 interview in terms of paperwork files. What is the LOWEST price at which a trade between Alec and Ellie takes place? Enter a number only.
Deborah sells bottled water from a small stand by the beach. On the last day of summer vacation, many people are on the beach, and Deborah realizes that she can make a lot more money this day if she hires someone to walk up and down the beach selling water. She finds a college student named Carlos and makes him the following offer: They'll each sell water all day and split their earnings (revenue minus the cost of water) equally at the end of the day. Deborah knows that if they both work hard, Carlos will earn $90 on the beach and Deborah will earn $180 at her stand, so they will each take home half of their total revenue: = $135. If Carlos shirks, he'll generate only $50 in earnings. Deborah does not know that Carlos estimates his personal cost (or disutility) of working hard as opposed to shirking at $25. $90+$180 Once out of Deborah's sight, Carlos faces a dilemma: work hard (put in full effort) or shirk (put in low effort). In terms of Carlos's total utility, it is better for him…