Problem 7.1. The Garold Wayne Exotic Animal Memorial Park (aka GW Zoo) was a one-of-a-kind park...

Transcribed Image Text:

Problem 7.1. The Garold Wayne Exotic Animal Memorial Park (aka GW Zoo) was a one-of-a-kind park run by charismatic tiger breeder Joe Exotic. The table and graph below present hourly demand for visits to the park in 2005. Because the park had no competitors, the owner could set the number of tickets per day as a monopolist. P Marginal Quantity Price Revenue Revenue (visitors/hour) ($/visitor) ($/hour) ($/visitor) ($/visit) 100 90 80 0 100 70 2 80 60 4 60 50 6 40 40 8 20 30 10 0 20 10 0 1 2 3 4 5 6 7 Demand 8 9 Visitors (visits/hour) (a) Calculate the park's revenue at each ticket quantity, and record the values in the table's third column. (b) By comparing revenue across rows, compute marginal revenue. (Don't forget the denominator AQ in computing marginal revenue AR.) (c) In the graph, plot the five points that are the pairs of visitors and marginal revenue. Since marginal revenue is computed over the range from one quantity to another (e.g., from 2 to 4), use the midpoint (e.g., 3) between the starting and ending quantities for the number of visitors on the horizontal axis. equal to the price of admis- (d) At each quantity, marginal revenue is sion to the park. greater than less than Problem 7.1. The Garold Wayne Exotic Animal Memorial Park (aka GW Zoo) was a one-of-a-kind park run by charismatic tiger breeder Joe Exotic. The table and graph below present hourly demand for visits to the park in 2005. Because the park had no competitors, the owner could set the number of tickets per day as a monopolist. P Marginal Quantity Price Revenue Revenue (visitors/hour) ($/visitor) ($/hour) ($/visitor) ($/visit) 100 90 80 0 100 70 2 80 60 4 60 50 6 40 40 8 20 30 10 0 20 10 0 1 2 3 4 5 6 7 Demand 8 9 Visitors (visits/hour) (a) Calculate the park's revenue at each ticket quantity, and record the values in the table's third column. (b) By comparing revenue across rows, compute marginal revenue. (Don't forget the denominator AQ in computing marginal revenue AR.) (c) In the graph, plot the five points that are the pairs of visitors and marginal revenue. Since marginal revenue is computed over the range from one quantity to another (e.g., from 2 to 4), use the midpoint (e.g., 3) between the starting and ending quantities for the number of visitors on the horizontal axis. equal to the price of admis- (d) At each quantity, marginal revenue is sion to the park. greater than less than