monopoly problem
bahlman2
Bahlman_Chapter_6_Monopoly_Problem_Start.xlsxProblem
| Monopoly Problem | |||||||
| 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 | |||||||
Instructions
| Project Description: In this problem, you will determine the price, quantity demanded, and profit for the monopolized industry. | ||
| For the purpose of grading the project you are required to perform the following tasks: | ||
| Step | Instructions | Points Possible |
| 1 | Start Excel. | 0 |
| 2 | In cell F9, by using cell references, calculate the total revenue. Use cells C9 and D9. Copy the formula from cell F9 down the column to cell F23. | 1 |
| 3 | In cell G10, by using cell references, calculate the marginal revenue. Use cells C9, F9, C10, and F10. Copy the formula from cell G10 down the column to cell G23. | 1 |
| 4 | In cell H10, by using cell references, calculate the marginal cost. Use cells C9, E9, C10, and E10. Copy the formula from cell H10 down the column to cell H23. | 1 |
| 5 | In cell D25, by using a cell reference, determine the price charged for entrance to the tourist attraction. Refer to an appropriate cell among D9-D23. | 1 |
| 6 | In cell D26, by using a cell reference, determine the quantity demanded corresponding to the price in cell D25. Refer to an appropriate cell among C9-C23. | 1 |
| 7 | In cell D28, by using cell references, calculate the profit corresponding to the price in cell D25 and the quantity demanded in cell D26. Use the appropriate cells among E9-F23. | 1 |
| 8 | Save the workbook. Close the workbook and then exit Excel. Submit the workbook as directed. | 0 |
