The residents of the town Ectenia all love economics, and the mayor proposes building an economics museum. The museum has a fixed cost of $2,400,000 and no variable costs. There are 100,000 town residents, and each has the same demand for museum visits: Qp = 11-P, where P is the price of admission. On the following graph, use green points (triangle symbol) to graph the museum's average-total-cost curve at the following quantities: 1,000 visits, 000 visits, 3,000 visits, 4,000 visits, 6,000 visits, and 12,000 visits. Then use the orange line (square symbol) to graph the museum's marginal-cost surve. 2400 2200 2000 1800 1600 1400 1200 1000 800 600 400 200 0 0 1 2 3 5 67 Visits (Thousands) 4 8 9 10 11 12 Average Total Cost 11 Marginal Cost

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
The residents of the town Ectenia all love economics, and the mayor proposes building an economics museum. The museum has a fixed cost of
$2,400,000 and no variable costs. There are 100,000 town residents, and each has the same demand for museum visits: Qp = 11-P, where P is the
price of admission.
On the following graph, use green points (triangle symbol) to graph the museum's average-total-cost curve at the following quantities: 1,000 visits,
2,000 visits, 3,000 visits, 4,000 visits, 6,000 visits, and 12,000 visits. Then use the orange line (square symbol) to graph the museum's marginal-cost
curve.
2400
2200
2000
1800
1600
1400
1200
1000
800
600
400
200 +
0
0
1
2
3
4
5 6
7
Visits (Thousands)
8
9
10
11 12
Average Total Cost
0-
Marginal Cost
?
Transcribed Image Text:The residents of the town Ectenia all love economics, and the mayor proposes building an economics museum. The museum has a fixed cost of $2,400,000 and no variable costs. There are 100,000 town residents, and each has the same demand for museum visits: Qp = 11-P, where P is the price of admission. On the following graph, use green points (triangle symbol) to graph the museum's average-total-cost curve at the following quantities: 1,000 visits, 2,000 visits, 3,000 visits, 4,000 visits, 6,000 visits, and 12,000 visits. Then use the orange line (square symbol) to graph the museum's marginal-cost curve. 2400 2200 2000 1800 1600 1400 1200 1000 800 600 400 200 + 0 0 1 2 3 4 5 6 7 Visits (Thousands) 8 9 10 11 12 Average Total Cost 0- Marginal Cost ?
What kind of market would describe the museum?
Natural monopoly
Perfectly competitive market
Single-price monopoly
The mayor proposes financing the museum with a lump-sum tax of $24 and then opening the museum to the public for free.
Under this system, each person would visit [
times. The benefit each person would get from the museum would be $
can measure the benefit as consumer surplus minus the new tax.)
The mayor's anti-tax opponent says the museum should finance itself by charging an admission fee.
The lowest price the museum can charge without incurring losses is S
$3, $4, and $5.) At this price, each resident's consumer surplus is S
Which of the following statements are true? Check all that apply.
(Hint: You
(Hint: Find the number of visits and museum profits for prices of $2,
Consumers are worse off with the admission fee than under the mayor's plan.
Revenue per person is the same regardless of whether an admission fee or the mayor's plan is used.
Total societal welfare is better with the admission fee than under the mayor's plan.
Transcribed Image Text:What kind of market would describe the museum? Natural monopoly Perfectly competitive market Single-price monopoly The mayor proposes financing the museum with a lump-sum tax of $24 and then opening the museum to the public for free. Under this system, each person would visit [ times. The benefit each person would get from the museum would be $ can measure the benefit as consumer surplus minus the new tax.) The mayor's anti-tax opponent says the museum should finance itself by charging an admission fee. The lowest price the museum can charge without incurring losses is S $3, $4, and $5.) At this price, each resident's consumer surplus is S Which of the following statements are true? Check all that apply. (Hint: You (Hint: Find the number of visits and museum profits for prices of $2, Consumers are worse off with the admission fee than under the mayor's plan. Revenue per person is the same regardless of whether an admission fee or the mayor's plan is used. Total societal welfare is better with the admission fee than under the mayor's plan.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 6 steps with 1 images

Blurred answer
Knowledge Booster
Market for Pharmaceuticals
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education