Economics 108 Homework #6 CHAPTER 15 Assignment

1. Which of the following circumstances might aect the price of a hamburger at Waldos
lunch counter?
a) The price of meat goes up.
b) A new restaurant tax of 50 cents per hamburger is imposed.
c) Waldo is discovered to be in violation of a safety code, and the violation would be
prohibitively expensive to correct. As a result, Waldo is certain to incur a ne of
$500 every year from now on.
d) A new restaurant tax of $500 per year per restaurant is imposed.
e) Word gets around that a lot of Waldos customers have been having stomach
problems lately.
2. A famous ballplayer for the Chicago Cubs threatens to quit unless his salary is doubled,
and the management accedes to his demand.
a) True or False: The fans will have to pay for this through higher ticket prices.
b) If the Cubs also hire a famous and popular player from another ballclub, what
happens to ticket prices?
3. A monopolist faces the following demand and variable cost schedules:
Demand
Quantity Price
1
$20
2
19
3
18
4
17
5
16
6
15
7
14
8
13
9
12
10
11
11
10
12
8

VariableCost
$2
5
9
14
20
27
35
44
54
65
77
90

The monopolists xed costs are $10. Create a chart with columns for Total Revenue,
Marginal Revenue, Fixed Cost, Variable Cost, Total Cost, Marginal Cost, and Prot.
What quantity does the rm produce? What price does it charge?
4. The Taos Pueblo is an ancient American Indian community that admits tourists. The
admission fee is $5 per person plus $5 per camera. Of the following possible explanations
for this pricing policy, which one(s) would count as price discrimination?
a) Tourists with cameras are more likely to be intrusive, poking into peoples private
residences.
b) Tourists with cameras are likely to stay longer.
c) Tourists with cameras are generally more enthusiastic about visiting the reservation.
d) Tourists with cameras are less likely to buy postcards sold by the reservation.