The demand schedule

 

 

 

 

“1880 Town is a tourist attraction in Midland, SD. Owners of this attraction have collected buildings built between 1880 and 1920, filled them with antique furniture and collectables, and now charge admission for tourists to experience history. Because of the exclusivity and location of 1880 Town, this tourist attraction enjoys a measure of monopoly power.
Suppose you run a tourist attraction similar to 1880 Town. After running some tests with pricing, you have formulated a daily demand schedule for admission as given. In addition to tracking demand at various price levels, you also monitor costs closely.

a) Using the demand schedule provided, find total revenue and marginal revenue at each point.
b) Using total costs, find marginal costs at each point. (Just as marginal revenue is the change in total revenue divided by a change in Q, marginal cost is the change in total cost divided by a change in Q.)
a) b)
QD P TC TR MR MC
0 $70 $1,000
25 $65 $1,275
50 $60 $1,525
75 $55 $1,750
100 $50 $1,950
125 $45 $2,125
150 $40 $2,275
175 $35 $2,400
200 $30 $2,550
225 $25 $2,725
250 $20 $2,925
275 $15 $3,150
300 $10 $3,400
325 $5 $3,675
350 $0 $3,975
c) “How much should you charge for entrance to the tourist attraction and how many visitors do you expect to have?

Price
Quantity
d) What is the profit at this point?
Profit

 

 

In this problem, you will determine the price, quantity demanded, and profit for the monopolized industry.

 

Sample Solution

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