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Economics 108 Homework #6




Question;1. Which of the following circumstances might aect the price of a hamburger at Waldos lunch counter?a) The price of meat goes up.b) A new restaurant tax of 50 cents per hamburger is imposed.c) Waldo is discovered to be in violation of a safety code, and the violation would be prohibitively expensive to correct. As a result, Waldo is certain to incur a ne of $500 every year from now on.d) A new restaurant tax of $500 per year per restaurant is imposed.e) Word gets around that a lot of Waldos customers have been having stomach problems lately.2. A famous ballplayer for the Chicago Cubs threatens to quit unless his salary is doubled, and the management accedes to his demand.a) True or False: The fans will have to pay for this through higher ticket prices.b) If the Cubs also hire a famous and popular player from another ballclub, what happens to ticket prices?3. A monopolist faces the following demand and variable cost schedules:DemandQuantity Price1$2021931841751661571481391210111110128VariableCost$259142027354454657790The monopolists xed costs are $10. Create a chart with columns for Total Revenue,Marginal Revenue, Fixed Cost, Variable Cost, Total Cost, Marginal Cost, and Prot.What quantity does the rm produce? What price does it charge?4. The Taos Pueblo is an ancient American Indian community that admits tourists. The admission fee is $5 per person plus $5 per camera. Of the following possible explanations for this pricing policy, which one(s) would count as price discrimination?a) Tourists with cameras are more likely to be intrusive, poking into peoples private residences.b) Tourists with cameras are likely to stay longer.c) Tourists with cameras are generally more enthusiastic about visiting the reservation.d) Tourists with cameras are less likely to buy postcards sold by the reservation.


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