immy has a room that overlooks, from some distance. telescope for $50 a week as
ID: 1197914 • Letter: I
Question
immy has a room that overlooks, from some distance. telescope for $50 a week as a monopolist for eyepiece. Jimmy believes he has the a major league baseball stadium. He decides to renta overlooks, from some distance, a and charge his friends and classmates to use it to peep at the game for 30 seconds. He can act who takes a 30 second peep, it costs limmy $.20 to clean the renting out "peeps". For each person who takes a 30 second he has the following demand for his service Price ofQuantin a) For each price, calculate the total revenue from selling peeps and the marginal peep. revenue per MR Price X Quantity= TR S1.20 1.00 90 100 150 350 400 450 50 30 20 .10 550/ b) At what quantity will limmy's profit be maximized? What price will he charge? What will his total profit be? c) Jimmy's landlady complains about all the visitors coming into the building and tells Jimmy to stop selling peeps. Jimmy discovers, though, if he gives the lady $.20 for every peep he sells, she will stop complaining. What effect does this bribe have on the marginal cost per peep? What is the new profit maximizing equilibrium quantity of peeps? What effect does the bribe have on Jimmy's profits (all these answers should be numbers)?Explanation / Answer
Answer for part a) is correct.
b. Profits are maximum when difference between TR-TC is maximum. It is maximum at quantity 250. He will charge price of 0.7 and earn a profit of 75.
c. Marginal cost of Jimmy increases by 0.2. Profit maximising quantity is 200 and maximum profits decline to 30
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