econ homework questions for kate

Chapter 13 Homework: six questions (SHOW YOUR WORK)

Two point questions:

Use the demand schedule that follows to answer questions 1, 2, and 3.

1. calculate total revenue and marginal revenue at each quantity.

2. Use Chapter 4’s total-revenue test for price elasticity to determine at which price levels the demand is elastic and inelastic.

3. Suppose the marginal cost of successive units of output were $3.50. What output would the profit‑seeking firm produce and what price would the firm charge?

Price	Quantity Demanded	Total Revenue	Marginal Revenue	Elasticity
$ 8.00	0
$ 7.50	1
$ 7.00	2
$ 6.50	3
$ 6.00	4
$ 5.50	5
$ 5.00	6
$ 4.50	7
$ 4.00	8
$ 3.50	9
$ 3.00	10

A book publisher initially prices both hardback books and paperback books at $20 per book. The hardback version comes out first, followed two months later by the paperback version. The publisher initially sells the same number of hardbacks and softbacks (100 each). A hardback book costs $3.00 to produce, and a paperback book costs $2.00 to produce.

4. Complete the following table.

	Price	Quantity	Revenue	Total Cost	Profit
Hardback	$20	100
Paperback	$20	100
Total		200

5. The price elasticity of demand for hardback buyers is 0.70, and the price elasticity of demand for paperback buyers is 1.6. Suppose the publisher had increased the price for hardbacks by 10 percent and decreased the price of paperbacks by 10 percent. Complete the following table (use the formula: Elasticity = Percent change in quantity demanded divided by the percent change in price)

	Price	Quantity	Revenue	Total Cost	Profit
Hardback	$22
Paperback	$18
Total

6. Does price discrimination increase or decrease the publisher’s profits? If so, by how much?