Suppose Melody owns a business giving piano lessons. Assume that the market for piano lessons is perfectly
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Question:
Suppose Melody owns a business giving piano lessons. Assume that the market for piano lessons is perfectly competitive and that the equilibrium price of a piano lesson is $20. Melody’s total costs vary depending on the number of piano lessons she offers each day, as shown in the table below.
Number of lessons per day | Total cost per day ($) |
0 | 30 |
1 | 50 |
2 | 68 |
3 | 78 |
4 | 96 |
5 | 115 |
6 | 138 |
7 | 168 |
8 | 208 |
a. When Melody gives 3 lessons per day, what is her average variable cost?
b. What is the profit-maximizing number of lessons for Melody to give each day?
c. What is Melody's daily economic profit at her profit-maximizing number of lessons?
Related Book For
Microeconomics
ISBN: 9781464146978
1st edition
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson
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