Blog

Use the following scenario to answer this question.Barb’s Slo-Smoke is a barbecue stand in Memphis, Tennessee. It operates as a pop-up shop on weekends. Imagine that Barb’s minimum average total cost (ATC) is $8.75 and that its minimum average variable cost (AVC) is $6.75. Assume there are no barriers to entry into or exit from this market.   What is the minimum price at which Barb’s Slo-Smoke will continue to open for business on weekends?

  One possible outcome of promoting competition is

  If the price is greater than both the marginal cost and the average variable cost, what should a perfectly competitive firm do?

Consider the following scenario to answer this question.Lidia’s Pizza is a restaurant located near a college campus. The restaurant attracts two distinct types of customers—college students and local residents. The owners are considering offering a student discount of $2 off a large pizza, which is regularly priced at $12. There are 1,000 students interested in purchasing a large pizza, with a maximum willingness to pay of $10. There are 3,000 local residents interested in purchasing a large pizza, with a maximum willingness to pay of $12. Assume that each customer, at most, will purchase one large pizza and the marginal cost is $6.   What is the difference in the amount of total consumer surplus if Lidia’s offers a large pizza at the single price of $10 instead of the previous single price of $12?  

C.          P = $2          Q = 10,000          TC = $16,000          ATC = (MIN) minimum value

Why would a theme park practice price discrimination by age for admission but not for souvenirs? Which age group would pay more? Why?

  One benefit of price discrimination is that

  The __________ cost pricing rule means that the government can regulate a natural monopoly to minimize deadweight loss without forcing the private firm out of the market.

  As a firm hires more labor and each worker is able to specialize, what happens to workers’ marginal productivity?

  Lost Springs is a small town in Wyoming with access to only one gas station. The price of gasoline in Lost Springs most likely