« previous next »

Author Question: Land in the South can often be used to grow either tobacco or cotton. Suppose the price of tobacco ... (Read 127 times)

lunatika

  • Hero Member
  • *****
  • Posts: 548
on: Jun 29, 2018
Land in the South can often be used to grow either tobacco or cotton. Suppose the price of tobacco increases. Explain how the market for cotton will be affected.
 
  What will be an ideal response?

Question 2

A monopolist has the demand and marginal cost schedules given in the above table. If the monopoly can perfectly price discriminate, what is the profit-maximizing level of output and price?
 
  What will be an ideal response?


chereeb

  • Sr. Member
  • ****
  • Posts: 326
Reply #1 on: Jun 29, 2018
Answer to Question 1

Because of the higher price of tobacco, farmers will reduce the amount of cotton grown and grow more tobacco. Thus, the supply of cotton will fall. This will raise the equilibrium price of cotton and reduce the equilibrium quantity sold.

Answer to Question 2

As a perfectly price discriminating monopoly, the profit-maximizing level of output is 4 units and the price ranges from 22 to 16 for each unit.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

No drugs are available to relieve parathyroid disease. Parathyroid disease is caused by a parathyroid tumor, and it needs to be removed by surgery.

Did you know?

The liver is the only organ that has the ability to regenerate itself after certain types of damage. As much as 25% of the liver can be removed, and it will still regenerate back to its original shape and size. However, the liver cannot regenerate after severe damage caused by alcohol.

Did you know?

Immunoglobulin injections may give short-term protection against, or reduce severity of certain diseases. They help people who have an inherited problem making their own antibodies, or those who are having certain types of cancer treatments.

Did you know?

Most women experience menopause in their 50s. However, in 1994, an Italian woman gave birth to a baby boy when she was 61 years old.

Did you know?

Chronic necrotizing aspergillosis has a slowly progressive process that, unlike invasive aspergillosis, does not spread to other organ systems or the blood vessels. It most often affects middle-aged and elderly individuals, spreading to surrounding tissue in the lungs. The disease often does not respond to conventionally successful treatments, and requires individualized therapies in order to keep it from becoming life-threatening.

Alan Price - Poor People Alan Price - Poor People
Tobacco smoke and radon are the most dangerous indoor pollutants in the industrialized world Tobacco smoke and radon are the most dangerous indoor pollutants in the industrialized world
South American Indigenous Woman and Child South American Indigenous Woman and Child
"The Department of Agriculture came out today with its prediction for food price "The Department of Agriculture came out today with its prediction for food price
Plot of Land (Modified Offset Method) Plot of Land (Modified Offset Method)
Infected Tobacco Leaves by a Virus Infected Tobacco Leaves by a Virus
Video: Alternative Energy Sources

For a complete list of videos, visit our video library