ECO101: Tutorial 9

Marginal Revenue of the 21st Unit
- A monopolist faces the following demand schedule:
  - Q: 19, 20, 21, 22
  - MWTP (Marginal Willingness to Pay): $180, $170, $160, $155
- Options:
  - A. -$120
  - B. -$100
  - C. -$40
  - D. $50
  - E. $100
Marginal Revenue Calculation for Q = 120
- Demand equation: Q(P) = 600 - P/4
- Options:
  - A. 1220
  - B. 1440
  - C. 1500
  - D. 1660
  - E. None of the above
Chiron's Warrior-Training School Pricing
- One teacher, one student per hour.
- Monthly expenses: $500 rent; opportunity cost: $80 per hour at a pharmacy.
- Demand for training hours: Q = 300 - 2P.
- Options for profit-maximizing price:
  - A. 80
  - B. 95
  - C. 100
  - D. 115
  - E. None of the above
Chiron's Maximum Profits
- Options:
  - A. 1,050
  - B. 1,400
  - C. 2,450
  - D. 7,970
  - E. None of the above
App Registration and Downloads Costs
- Cost: $20 registration + $1 MC per download.
- Demand curve: MWTP(Q) = 100 – Q.
- Options for elasticity of demand at profit-maximizing price:
  - A. Infinitely elastic
  - B. Elastic, but not infinitely elastic
  - C. Unit elastic
  - D. Inelastic, but not perfectly inelastic
  - E. Perfectly inelastic

Effect of a $5 Price Ceiling on Marginal Cost
- Costs: $100 per period fixed cost, $2 marginal cost, Pm = $10.
- Options:
  - A. PS may increase or decrease. TS may increase or decrease
  - B. PS will decrease and may be positive or negative at Pm = $5. TS will increase
  - C. PS will decrease and may be positive or negative at Pm = $5. TS may increase or decrease
  - D. PS will decrease but will still be positive at Pm = $5. TS will increase
  - E. PS will decrease but will still be positive at Pm = $5. TS may increase or decrease

Profit Calculation for BrandtPhone App in 2026
- Registration cost: $1,250; Demand MWTP(Q) = 30 – Q/10; MC: $10 per download.
- Options:
  - A. –$250
  - B. $0
  - C. $250
  - D. $1000
  - E. $2000
Quantity Effect of Supplying 21 instead of 20 Units
- Demand schedule: Q: 19, 20, 21, 22; MWTP: $175, $160, $150, $145.
- Options:
  - A. $160
  - B. $150
  - C. $200
  - D. $210
  - E. None of the above
Price Effect of Supplying 21 instead of 20 Units
- Options:
  - A. -$210
  - B. -$200
  - C. -$160
  - D. -$150
  - E. None of the above
Elasticity of Demand for Ticketing Seller
- Marginal costs are zero.
- Options:
  - A. 0
  - B. 1
  - C. ∞
  - D. Not enough information
Roy Logan's Plan for Local Cable Monopoly
- Current market: perfectly competitive, long-run equilibrium; MC = $20.

Local Cable Market Demand Curve
- Demand represented by P = 100 - 0.10Q (Q in thousands).
- Characteristics to plot:
  - Monopolist Price (PM)
  - Monopolist Quantity (QM)
  - Perfect Competition Price (PE)
  - Perfect Competition Quantity (QE)
  - Consumer & Producer Surplus
  - Deadweight Loss
Total Profits for Roystar-LoganCo
- Evaluate total profits as a monopolist after purchasing local channels.
Patents Duration and Total Surplus
- Current patent duration: 20 years; effective patent duration for drugs: about 8 years.
- Consider implications of increasing patent length to 32 years on total surplus.
Real-Life Monopoly Examples
- Discussion on existing monopolies and industries that should be monopolies but aren't.