Assignment 19162

The cost of duplicating the video on a
DVD and mailing the DVD is $6.58. In a GSTCG member meeting, the video plan was
discussed. Table 1. shows the expected demand for the DVD at different
suggested donation levels, and they can act as a single-price monopolist if
they choose to. The receipts will be used to fund GSTCG supplies for their data
collection and conservation work. At the end of each sea turtle nesting season,
any excess funds are donated by the GSTCG to a local non-profit sea turtle
research and rehabilitation facility.

Table 1.

Suggested Donation per DVD Request

Anticipated Number of DVD Requests

$19.00

0

$15.00

2

$9.50

4

$7.75

10

$3.00

15

$0.00

20

  a. Complete Table 2. by computing the Total
Revenue, Marginal Revenue, and Profit columns.

Table 2.

Suggested Donation per DVD Request

Anticipated Number of DVD Requests

Total Revenue

Marginal Revenue

PROFIT

$19.00

0

$15.00

2

$9.50

4

$7.75

10

$3.00

15

$0.00

20

b. The
President wants the GSTCG to provide videos to generate the most possible
donations (Total Revenue). What price is the President of the GSTCG favoring
and how many people will receive the DVD if this becomes the price of the
suggested donation? Explain your answers.

c. The
Education Outreach Committee wants the GSTCG to provide videos to the most
possible number of people. What price is the Educational Outreach Committee
favoring and how many people will receive the DVD if this becomes the price of
the suggested donation? Explain your answers.

d. The
Treasurer of the GSTCG wants the DVD program to be as efficient as possible so
that the marginal revenue equals marginal cost. What price is the Treasurer
favoring and how many people will receive the DVD if this becomes the price of
the suggested donation? Explain your answers.

e. The
Fund Raising Committee wants the DVD program to generate as much profit in
donations as possible. What price is the Fund Raising Committee favoring and
how many people will receive the DVD if this becomes the price of the suggested
donation? Explain your answers.

2. A
business has been created to provide needed services to its market. As the only
provider of this service, it functions as a monopoly, with the ability to set
prices and having the entire market demand schedule as its demand curve.
Because the monopoly is newly formed, there is no government intervention into
the monopoly’s pricing actions. Examine Diagram 2. and answer each of the
following questions with complete explanations:

  a. What is quantity (a) and why is
it important?

  b. What is the value at point (b)
and why is it important?

  c. What is the value at point (c)
and why is it important?

  d. What is the value at point (d)
and why is it important?

e. What is the meaning
of the green rectangle labeled (e)?

f. If there were no
monopoly and this was a perfectly competitive market, what would quantity at
point (f) be and why is it important?

g. If there were no
monopoly and this was a perfectly competitive market, what would point (g) be
and why is it important?

h. For the market in
which the monopoly now operates, what does the red triangle labeled (h) mean,
and why is it important?

3. A
governmental regulating agency was created to oversee the monopoly in Question 2’s
operations and pricing. Diagram 3. depicts a new price ceiling set by the
regulators. Answer each of the following questions with complete explanations:

  a. What is
quantity (a) and why is it important?

  b. What is
the value at point (b) and why is it important?

  c. At what
level was the price ceiling set?

  d. What is
the value at point (c) and why is it important?

  e. At this
price ceiling level, will the monopoly make any monopoly profits?

  f. At this
price ceiling level, will the monopoly cover its costs?

  g. At this
price ceiling level, will the monopoly continue in business in the long run?

4.
Diagram 4. depicts a different price ceiling set by the regulators for the
monopoly in Question 2. Answer each of the following questions with complete
explanations:

  a. What is
quantity (a) and why is it important?

  b. What is
the value at point (b) and why is it important?

  c. At what
level was the price ceiling set?

  d. At this
price ceiling level, will the monopoly make any monopoly profits?

  e. At this
price ceiling level, will the monopoly cover its costs?

  f. At this
price ceiling level, will the monopoly continue in business in the long run?

5.
Explain your understanding of how price effect contributes to the fact that,
for a monopoly, marginal revenue is always less than the price.

6.
Explain your understanding of how quantity effect contributes to the fact that,
for a monopoly, marginal revenue is always less than the price.