Chapter 10
1)	Suppose the following table sumarizes demand from adults and children
	for visiting an amusement park.
	Price ($)	Q (adults)	Q (children)
	5	15	20				To do the problem with Tables we have to calculate MR at each quantity.								To get the table for children, let us include entries for the odd quantities
	6	14	18				So we must redo the Table in the following way:								and assume the price is half-way between those in the original table.
	7	13	16						Adults						Children					Both
	8	12	14						Q	P	TR	MR			Q	P	TR	MR		Q	P	TR	MR
	9	11	12						6						2					8
	10	10	10						7						3					11
	11	9	8						8						4					14
	12	8	6						9						5					17
	13	7	4						10						6					20
	14	6	2						11						7					23
									12						8					26
	Suppose Marginal Cost is fixed at $5 (and therefore average variable cost is also fixed at $5).								13						9					29
	Assuming fixed cost is zero and the owners wish to maximize profit, answer the following questions.								14						10					32
a.	Calculate the profit-maximizing price, quantity and profit if								15						11					35
	i) The amusement part charges different admissions prices														12
	ii) It charges the same price to adults and children														13
	iii) Explain the difference in the profits realized.														14
	Answer by creating Tables for MR, MC, total Revenue and total cost.														15
															16
b.	Redo part "a" but his time use math. The equations for quantity demanded are:
	Adults	Q = 20 -P
	Children	Q = 30 - 2P
	Both	Q = 50-3P
2.	Schultzs Orchard grows two types of fruitmelons and strawberriesand
	over the years it has been able to chart two production levels and resulting total costs.
	The following tables compare the two levels, where strawberries are measured in flats and melons are measured in cartons:
	If Total Cost = $15,000			If Total Cost = $25,000
	Strawberries	Melons		Strawberries	Melons
	2700	0		4200	0
	2400	600		3600	900
	1800	1200		2700	1800
	1200	1500		2100	2100
	750	1650		900	2550
	0	1800		0	2700
	Obviously, the orchard can produce more if it invests more, but it is not necessarily the case that the increase in output is worth in the increase in total cost.
	This year it is expected that the price of strawberries will be $10 per flat and melons will be $15 per carton.
a.	What is the best production mix at each cost level?
b.	What will Schultzs profit be at each production level?
c.	Should Schultz invest $15,000 or $25,000?
3.	Note: in answering this question remember that contribution profit is the same thing as contribution margin, the amount that total revenue exceeds total variable cost
	Last year Prestige sold 5,000 desks at a price of $500, so total revenue is $2,500,000.
	Since contribution profit was $700,000, total variable cost was $1,800,000 or $360 per desk
	A consultant suggests lowering the price by $30 and he estimates that another 500 desks would be sold.
	A trade association estimates the price elasticity of demand is -1.8.
	Evaluate the proposal. To do so, first calculate the elasticity of demand assumed by the consultant and think about what the
	calculated elasticity implies about the relationship between price and total revenue.