19. (Not suitable for vegetarians) Peter Morgan sells pigeon pies from his pushc

Question

19. (Not suitable for vegetarians) Peter Morgan sells pigeon pies from his pushcart in Central Park Due to the abundant supplies of raw materials, his costs are zero. The demand schedule for his pigeon pies is ply)-150-y/3. What level of output will maximize Peters profits? a. 225 b. 45 C. 450 d. 675 e. 100 A monopolist sells in two separate markets. The demand curve for her product is given by P1 = 141 -3x1 in the first market and p2-115-2x2 in the second market, where x is the quantity sold in market i and p, is the price charged in market i. She has a constant marginal cost of production, c 3, and no fixed costs. She can charge different prices in the two markets. What is the profit-maximizing combination of quantities for this monopolist? a. x,-46 and x -30. b. x1-51 and x2-23. c. x1-23 and x2-28 d. X1 33 and x2- 26. e. x-43 andx -38. 20. A careful analysis of demand for Bubbles in Strasburg, North Dakota, reveals a strange segmentation in the market. (Recall Bubbles is the beverage which produces an unexplained craving for Lawrence Welk's music). It is produced by the process Q-min(R/5, W), where R is the number of pulverized Lawrence Welk records and W is gallons of North Dakota well water. P- $1, Pw-$4.) If demand for Bubbles by senior citizens is described by -500P-2 while demand by those under 65 years old is Q, - 50Ps, how should Bubbles be priced to maximize profits? a. $13 for all citizens of Strasburg b. $9 for senior citizens and $30 for those younger c. $27 for senior citizens and $11.25 for those younger d. $13.50 for senior citizens and $45 for those younger e. $60 for senior citizens and $25 for those younger 21.

Explanation / Answer

19.

Given, TC = 0

Therefore, MC = 0

As per the profit maximizing condition, P = MC

Given, P = 150 – Y/3 [where P = Price, and Y = Level of output]

0 = 150 – Y/3

Y/3 = 150

Y = 450

The level of output is 450 units.

Answer: c

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