Price (dollars per ticket) Quantity (tickets per show) Total Cost (dollars per s
ID: 1186593 • Letter: P
Question
Price (dollars per ticket)
Quantity (tickets per show)
Total Cost (dollars per show)
20
0
1,000
18
100
1,600
16
200
2,200
14
300
2,800
12
400
3,400
10
500
4,000
8
600
4,600
6
700
5,200
4
800
5,800
BIg Top is the only circus on the nation. The table below illustrates the demand schedule for circus.
a. Calculate Big Top's profit maximizing price___ output ____ and economic profit if it charges a single price for all tickets_____
b. What is the consumer surplus?____ and producer surplus?_____
c. If the circus industry were perfectly competitive, how many tickets would be sold and what would be the price of a ticket?____
d. When Big Top maximizes profit, is the circus efficient? Explain.
Price (dollars per ticket)
Quantity (tickets per show)
Total Cost (dollars per show)
20
0
1,000
18
100
1,600
16
200
2,200
14
300
2,800
12
400
3,400
10
500
4,000
8
600
4,600
6
700
5,200
4
800
5,800
Explanation / Answer
Price (dollars per ticket)
Quantity (tickets per show)
Total Cost (dollars per show)
MC
TR [=P*Q]
MR
20
0
1,000
-
0
-
18
100
1,600
6[=dTC/dQ=600/100]
1800
18 [=dTR/dQ=1800/100]
16
200
2,200
6
3200
14
14
300
2,800
6
4200
10
12
400
3,400
6
4800
6
10
500
4,000
6
5000
2
8
600
4,600
6
4800
-2
6
700
5,200
6
4200
-6
4
800
5,800
6
3200
-10
BIg Top is the only circus on the nation. The table below illustrates the demand schedule for circus.
a. Calculate Big Top's profit maximizing price___ output ____ and economic profit if it charges a single price for all tickets_____
Since it is a monopoly it faces a downward sloping demand curve. The profit maximizing quantity is given by MR=MC.
Profit maximizing Q=400; Price =$12; Economics Profit =TR-TC= 4800-3400 =$1400.
b. What is the consumer surplus?____ and producer surplus?_____
Consumer surplus = Area below demand curve and above equilibrium price =
Price (dollars per ticket)
Quantity (tickets per show)
Total Cost (dollars per show)
MC
TR [=P*Q]
MR
20
0
1,000
-
0
-
18
100
1,600
6[=dTC/dQ=600/100]
1800
18 [=dTR/dQ=1800/100]
16
200
2,200
6
3200
14
14
300
2,800
6
4200
10
12
400
3,400
6
4800
6
10
500
4,000
6
5000
2
8
600
4,600
6
4800
-2
6
700
5,200
6
4200
-6
4
800
5,800
6
3200
-10
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