Each identical consumer has the following demand for golf, q = 100 - p, where q is the number of rounds of golf played per year and p is the price per round. The only golf course in an isolated town incurs a marginal cost of $10 per round of golf. It wishes to charge a membership fee and a fee per round of golf. What price will it set for each fee?
What will be an ideal response?
At a price of $10, consumer surplus is $4,050. The firm maximizes profit by setting the annual fee equal to $4,050 and charging a $10 per round fee.
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Suppose you purchase a call option to buy IBM common stock at $35 per share in September. The current price of IBM is 37 and the option premium is 4
What is the intrinsic value of the option? As the expiration date on the option approaches, what will happen to the size of the option premium?
The conditions in which vertical relationships can enhance a firm's ability to price discriminate include
a. the manufacturer's product is of value to just one type of customer b. the costs of arbitraging the price difference across markets is small c. the manufacturer acquires the distributer in the higher priced market d. competition provides little ability for the manufacturer to price above marginal cost
The aggregate supply curve represents:
a. the quantity of aggregate output that producers are willing and able to supply at each possible price level. b. the total quantity of a particular good that all producers are willing to supply at each possible price level. c. the total quantity of a particular good that all producers are willing to supply at the equilibrium price level. d. the quantity of aggregate output that producers are willing and able to supply at the equilibrium price level. e. the quantity of aggregate output that producers are willing and able to supply at the equilibrium level of GDP.
A decrease in the price level
a. increases the quantity of goods and services supplied in the short run. b. decreases the quantity of goods and services supplied in the long run. c. decreases the quantity of goods and services demanded. d. increases the quantity of goods and services demanded.