Determine price and the level of service

Assignment Help Macroeconomics

Reference no: EM1370018

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. A 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 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 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
Lawn Care Price Total Marginal Total Marginal
per Month per Hour Revenue Revenue Cost Cost
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 the 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: EM1370018

Questions Cloud

Verify local police department-s findings on firm-s case : Tension over case is running high in city. What do you require to ask police investigator for, and what procedures must you follow?

Explain what challenges or barriers may happen : Explain What challenges or barriers may happen and How will the best strategy be determined and What measures will you use to determine if the team is operating successfully

Determine the date in opening of letter : If /home/jenny/draft and /home/alex/letter are links to same file and following sequence of events occurs, what will be date in opening of letter? Alex gives command vim letter.

Determine profit position of the firm : Arrow now sells 100,000 silk shirts at $100 each. The material per shirt expense $40 and labor costs are $50 a shirt. The company has $1.2m. In fixed costs.

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

Provide network addresses which satisfy constraints : Subnet 1 is needed to support up to 125 Interfaces, and Subnet 2 and 3 are each needed to support up to 60 interfaces. Give three network addresses which satisfy these constraints.

Explain international business etiquette : Explain International Business Etiquette Needs to be 100% original and cited perfectly and consulting the published works of others is required

Calculate output, price at profit-maximizing activity level : Paradox Dental, Limited., enjoys a local monopoly in provision of oral examination services in Tuskegee, Alabama. Total and marginal revenue relations for standard procedure are:

Computing economic profit or loss : Suppose a perfectly competitive firm is producing 300 units of output, P = $10, ATC of 300th unit is $8, marginal cost of 300th unit = $10, and AVC of the 300th unit = $6. Based upon this information, the firm is:

User Account

All Pages