{ "cells": [ { "cell_type": "markdown", "metadata": {}, "source": [ "# Monopoly, costs problems\n", "## Prof. Rabanal [Econ 133]\n" ] }, { "cell_type": "markdown", "metadata": {}, "source": [ "### Problem 2: Elizabeth and the new volleyball club\n", "\n", "Elizabeth is thinking to start a new volleyball club in the remote island of Guam. Many parents are happy to enroll their children with the famous volleyball player. \n", "Her friend Katie estimates that the demand for the club is $Q^d = 1000 - 2p$, where $p$ is the fee that students have to pay per hour. Assume that there is no other club alternatives in the island, and the cost per student is 100. \n", "\n", "a. How many hours should Elizabeth open the club? \n", "\n", "b. Katie recommends her that perhaps she can get greater profits if she sets different fees for different hours. In this case, what will be Elizabeth's profit? \n", "\n", "c. Katie obtained the market demand (given above) for the club after aggregrating two type of consumers demands. The richer households demand, who are located in the West coast, is given by $Q^d_W = 600 - p$. \n", " - What's the demand for the east coast households? \n", " - If Elizabeth can set different fees for these two types of households, then what will be the fees and her total profit? \n", " - Provide some suggestions how Elizabeth can implement the differentiated fees according to the household income. \n", " \n", "\n", "\n", "\n" ] }, { "cell_type": "code", "execution_count": 1, "metadata": {}, "outputs": [ { "data": { "text/html": [ "
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QTRTCProfitsMRMCDelta ProfitsAFCAVCAC
00030NaNNaNNaNNaNNaNNaNNaN
115034NaNNaNNaNNaNNaNNaNNaN
2210040NaNNaNNaNNaNNaNNaNNaN
3315051NaNNaNNaNNaNNaNNaNNaN
4420068NaNNaNNaNNaNNaNNaNNaN
5525091NaNNaNNaNNaNNaNNaNNaN
66300120NaNNaNNaNNaNNaNNaNNaN
77350156NaNNaNNaNNaNNaNNaNNaN
88400206NaNNaNNaNNaNNaNNaNNaN
99450296NaNNaNNaNNaNNaNNaNNaN
1010500420NaNNaNNaNNaNNaNNaNNaN
\n", "
" ], "text/plain": [ " Q TR TC Profits MR MC Delta Profits AFC AVC AC\n", "0 0 0 30 NaN NaN NaN NaN NaN NaN NaN\n", "1 1 50 34 NaN NaN NaN NaN NaN NaN NaN\n", "2 2 100 40 NaN NaN NaN NaN NaN NaN NaN\n", "3 3 150 51 NaN NaN NaN NaN NaN NaN NaN\n", "4 4 200 68 NaN NaN NaN NaN NaN NaN NaN\n", "5 5 250 91 NaN NaN NaN NaN NaN NaN NaN\n", "6 6 300 120 NaN NaN NaN NaN NaN NaN NaN\n", "7 7 350 156 NaN NaN NaN NaN NaN NaN NaN\n", "8 8 400 206 NaN NaN NaN NaN NaN NaN NaN\n", "9 9 450 296 NaN NaN NaN NaN NaN NaN NaN\n", "10 10 500 420 NaN NaN NaN NaN NaN NaN NaN" ] }, "execution_count": 1, "metadata": {}, "output_type": "execute_result" } ], "source": [ "%matplotlib inline\n", "import pandas as pd\n", "dframe = pd.read_csv('tablecost.csv')\n", "dframe" ] }, { "cell_type": "markdown", "metadata": {}, "source": [ "### Problem 1: Justin and the maple tree\n", "Justin went to the woods and collected data of a firm that sells maple (per gallon). In his way back (for unknown reasons) he lost information about the chart below. \n", "\n", "a. Justin asks you for help in completing the chart below. \n", " \n", "b. What's the **fixed cost** (FC)? \n", " \n", "c. Mr. Brump (the deal maker) says that the best deal is to produce ($Q$) at the point in which the change of revenues ($MR$) is zero. Do you agree? What's your recommendation to Mr. Brump (assume that Mr. Brump listens to others in your answer)? \n", " \n", "d. What's the **unit cost** at your recommendation of optimal production (Q)?\n", " \n", "e. From the shape of MR, can we say that the maple firm has some power market? why? \n", " \n", "f. Assume that now the FC increases to 170. The firm is required to pay the FC, and cannot avoid it. Mr. Brump recommends to shut down the firm. Do you agree? What's your recommendation? \n", " \n", "g. Please do a graph with MC, AC and MR. Why does not MC cross the AC at its lowest point? \n", " \n", "h. Terry owns a vast amount of land in the Kennebuck region. Do you recommend her to start producing maple?\n", " " ] }, { "cell_type": "code", "execution_count": 2, "metadata": {}, "outputs": [ { "data": { "text/html": [ "\n", "\n", "\n", "\n", "\n", "\n", "\n", "\n" ], "text/plain": [ "" ] }, "execution_count": 2, "metadata": {}, "output_type": "execute_result" } ], "source": [ "from IPython.core.display import HTML\n", "def css_styling():\n", " styles = open(\"custom.css\", \"r\").read()\n", " return HTML(styles)\n", "css_styling()" ] } ], "metadata": { "kernelspec": { "display_name": "Python 2", "language": "python", "name": "python2" }, "language_info": { "codemirror_mode": { "name": "ipython", "version": 2 }, "file_extension": ".py", "mimetype": "text/x-python", "name": "python", "nbconvert_exporter": "python", "pygments_lexer": "ipython2", "version": "2.7.10" } }, "nbformat": 4, "nbformat_minor": 2 }