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You operate a piano tuning business. This is a setting where…

You operate a piano tuning business. This is a setting where you have some degree of market power due to location.  Table 1 gives your cost information and the demand curve that you face for house calls in April 2021.  The fixed cost reflects your monthly lease on vehicle you need to transport your tools.  All economic costs are included in the cost figures.   (32 points) Consider the demand and cost situation in April 2021.   You are in a situation where you a charging a single price to all buyers and you have not yet paid the fixed costs.  What is the optimal price and quantity for you to choose if you want to maximize profits?  Explain why you chose that quantity and price?      (32 points) On May 1st, the day after you signed the next month’s lease, some of your rivals begin running discounts that you expect to end at the end of the month.  The discount specials have cut your demand to the situation in Table 2.  What price and quantity would you choose if you are trying to maximize profits?  Discuss why you chose them.   (28 points) By the end of May, it has become clear that two other piano tuners have moved into your territory and you see that the demand for May 2021 in Table 2 will be the expected permanent demand.  You have not yet paid your rental costs for May 2021.  Now what price and quantity do you choose if you want to maximize profits? Explain.   (28 points) Now consider a situation where you are a first-degree price discriminator facing the demand in May 2021 in Table 2.  What would be your pricing strategy and what quantity would you choose if you wanted to maximize profits?     

Northern Charcoal Inc. operates a large scale charcoal mill….

Northern Charcoal Inc. operates a large scale charcoal mill. There is large residential apartment complex downwind and it turns out that the production of charcoal leads to the emission of foul odors.  As charcoal production increases, the marginal damage done to the apartment complexes’ property values increases.   Society in this area is composed of Northern Charcoal and Windy Pines Place Apartments.   The information below shows the costs and benefits to Northern Charcoal of producing charcoal and the external damage done to Windy Pines Place Apartments.  There are no positive externalities from charcoal production. (32 points) Determine the socially optimal amount of charcoal.  Explain your answer. (32 points) Suppose that there are extremely high negotiations costs between Northern Charcoal Inc. and Windy Pines Place Apartments and that Northern Charcoal has the right to pollute.  Northern Charcoal focuses on maximizing its own net benefit.  How many tons of charcoal do you anticipate will be produced? Explain.   (32 points) If there were zero negotiations costs and Windy Pines Place Apartments had the right to stop all pollutions, is it possible that Northern Charcoalcould end up producing the socially optimal amount of charcoal?  If not, explain why not?  If so, explain the process that would lead to the socially optimal amount.  Be specific using the information in the tables.  (24 points) Say there were high negotiations costs and Northern Charcoal had the right to pollute.  If you were trying to choose a per-unit tax per ton of charcoal that would get Northern Charcoal to choose the socially optimal production of charcoal, what would it be and why?  Remember that a per-unit tax means that the tax per ton of charcoal is the same amount for every ton produced.