Suppose you own a business form that faces the following demand curve: P = 8 0 - 2 Q . Further, MC = AC = $ 2 0 . Under “ the benchmark case ” , calculate the maximum amount of profits your firm can earn. 2 . Suppose you are earning the maximum profit, but your lease is up for renewal and the property owner wants to increase the rent by $ 5 0 0 . a . In response to the $ 5 0 0 additional cost, would you raise the price to cover the additional cost? Explain why you would or would not. Notice, rent is a fixed cost. b . In response to the $ 5 0 0 additional cost, suppose you implement a two - part tariff pricing strategy. Compute the amount of profit under the two - part tariff. c . Explain why the revenue is necessarily higher under the two - part than under the benchmark case.

The blue curve on the following graph represents the demand curve facing a firm that can set its own prices. Use the graph input tool to help you answer the following questions. You will not be scored on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per unit) 100 TOTAL REVENUE (Dollars) 90 80 20 10 0 1250 1125 1000 875 750 625 500 On the previous graph, change the number found in the Quantity Demanded field to determine the prices that correspond to the production of 0, 10, 20, 25, 30, 40, or 50 units of output. Calculate the total revenue for each of these production levels. Then, on the following graph, use the green points (triangle symbol) to plot the results. 375 250 125 + 0 0 0 Demand 5 10 15 20 25 30 35 40 45 50 QUANTITY (Units) + 5 20 10 15 25 30 35 QUANTITY (Number of units) 40 Graph Input Tool Market for Goods 45 50 Quantity Demanded (Units)…

FITnest is one of the few fitness centers serving the greater area. The gym has been open for 3 years. It charges a flat price of $25 per visit to its clients, and the firm’s current average cost of production is $10 per visit. (You may assume that average cost has the “traditional U-shape”.)  a) The owners of the gym heard you are studying economics, and they want some advice on how they could possibly increase their profits through price discrimination, which is a concept they have heard of but do not know much about. Provide an explanation of what price discrimination is and give them an example of how they could use group pricing in their climbing gym business. Explain how group pricing works to increase their profit.  b) Given the current situation in the market for fitness in the area, would you expect to see competitors enter or exit the market? Explain.   c) Given the current market conditions, what would you predict to observe in the long run with respect to the demand for…

you are an accountant for a manufacterer of radios. the demand function for the tablets is p= 40-4x2 where x is the number of tablets produced in millions. it costs the company $15 to make a tablet. write an equation for the manufactures profit as a function of the number of tablets produced. the company currently produces 1 million tablets and makes a profit of $21000000, but you would like to scale up production a bit, what greater number of tablets could the company produce to yield the same profit