Determine price and level of service for perfect competition

Assignment Help Macroeconomics

Reference no: EM1370258

Sun City, Arizona, a retirement community that features full-service living arrangements, is considering two proposals to provide lawn care to elderly residents. First, a national lawn care firm has offered to purchase the city's lawn care equipment at an attractive price in return for an exclusive franchise on residential service. The second proposal would allow several small companies to enter the business without any exclusive franchise agreement or competitive restrictions. Under this plan, individual companies would bid for the right to provide service in a given neighborhood. The city would then allocate the business to the lowest bidder.

The city has conducted a survey of Sun City residents to estimate the amount they would be willing to pay for various amounts of lawn care service. The city has also estimated the total cost of service per resident. Service costs are expected to be the same whether or not an exclusive franchise is granted.

A) Use the indicated price and total cost data to complete the following table

Hours of Price per Total Marginal Total Marginal
Care per Hour Revenue Revenue Cost Cost
Month

0 $22.50 $0.00
1 21.75 21.00
2 21.00 40.50
3 20.25 58.50
4 19.50 75.75
5 18.75 92.25
6 18.00 107.25
7 17.25 120.75
8 16.50 132.00
9 15.75 150.00
10 15.00 180.00

B) Determine price and level of service if competitive bidding results in a perfectly competitive price/output combination
C) Determine price and the level of service if the city grants a monopoly franchise

Reference no: EM1370258

Questions Cloud

Write program which prints question and reads user input : Write the program which prints question "Do you want to continue?" and reads user input. If user input is "Y", "Yes", "OK", "Sure", or "Why not?", print out "OK".

Explain how many units must be started to allow : Explain how many units must be started to allow for loss due to scrap

Computation of npv-irr-profitability index-payback period : The following data is presented on two mutually exclusive projects under consideration by the XYZ Company: Compute the following values for each project using the time value tables and Microsoft Excel.

How do organizations impact individuals : How do organizations impact individuals and what makes your organization unique from other organizations? What is organizational culture?

Determine price and level of service for perfect competition : Sun City, Arizona, a retirement community that features full service living arrangements, is planning two proposals to provide lawn care to elderly residents.

Contrast, compare and analyze sole proprietorship : Contrast, Compare and Analyze each of the following forms of business: sole proprietorship and partnership

Write java program which will permit user to input data : Write the Java Program which will permit the user to input data. The data will be validated using a loop that requires the user to input the data until it is correct or in the correct range. T

Determining average cost-marginal cost-average variable cost : Compute the Average cost, Marginal cost, Average Variable Cost and the output level at which Average Variable Cost is at a minimum.

Strategically place the warehouses : How important is it to strategically place the warehouses? What elements are involved to make the decision where a warehouse should be located?

User Account

All Pages