Answer Happy

1. Suppose a bar in a remote mining town is the only bar within
one hundred kilometres and so is a monopoly. The bar has a short
run cost function 𝐶(𝑄) = 6𝑄 + 100 and the market demand for its
drinks is 𝑄 = 400 − 40𝑝 where Q is the number of drinks and p is
the price of a drink.
a. Find the bar’s short run profit. (4)
b. The bar comes up with an idea to have a cover charge of $A
per person to enter the bar. There are twenty identical customers
that make up the market demand. Find the amount of the cover charge
A per person and the price per drink p the bar should set in order
to maximize profits. (4)
= 1. Suppose a bar in a remote mining town is the only bar within one hundred kilometres and so is a monopoly. The bar has a short run cost function C(Q): 6Q + 100 and the market demand for its drinks is Q = 400 – 40p where Q is the number of drinks and p is the price of a drink. a. Find the bar's short run profit. (4) b. The bar comes up with an idea to have a cover charge of $A per person to enter the bar. There are twenty identical customers that make up the market demand. Find the amount of the cover charge A per person and the price per drink p the bar should set in order to maximize profits. (4)