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Kaplan BU224 Unit 9 Assignment Monopoly Pricing

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Kaplan BU224 Unit 9 Assignment Monopoly Pricing

Questions

1. The Gulf Sea Turtle Conservation Group (GSTCG), a 501(c) (3) non–profit group of volunteers working to collect data on nesting sea turtles and to promote sea turtle conservation, is considering creating a video to educate people about sea turtle conservation. The cost of duplicating the video on a DVD and mailing the DVD is $6.58. In a GSTCG member meeting, the video plan was discussed. Table 1. shows the expected demand for the DVD at different suggested donation levels, and they can act as a single-price monopolist if they choose to. The receipts will be used to fund GSTCG supplies for their data collection and conservation work. At the end of each sea turtle nesting season, any excess funds are donated by the GSTCG to a local non-profit sea turtle research and rehabilitation facility.

a. Complete Table 2. by computing the Total Revenue, Marginal Revenue, and Profit columns.

b. The President wants the GSTCG to provide videos to generate the most possible donations (Total Revenue). What price is the President of the GSTCG favoring and how many people will receive the DVD if this becomes the price of the suggested donation? Explain your answers.

c. The Education Outreach Committee wants the GSTCG to provide videos to the most possible number of people. What price is the Educational Outreach Committee favoring and how many people will receive the DVD if this becomes the price of the suggested donation? Explain your answers.

d. The Treasurer of the GSTCG wants the DVD program to be as efficient as possible so that the marginal revenue equals marginal cost. What price is the Treasurer favoring and how many people will receive the DVD if this becomes the price of the suggested donation? Explain your answers.

e. The Fund Raising Committee wants the DVD program to generate as much profit in donations as possible. What price is the Fund Raising Committee favoring and how many people will receive the DVD if this becomes the price of the suggested donation? Explain your answers.

2. A business has been created to provide needed services to its market. As the only provider of this service, it functions as a monopoly, with the ability to set prices and having the entire market demand schedule as its demand curve. Because the monopoly is newly formed, there is no government intervention into the monopoly’s pricing actions. Examine Diagram 2. and answer each of the following questions with complete explanations:

3. A governmental regulating agency was created to oversee the monopoly in Question 2’s operations and pricing. Diagram 3. depicts a new price ceiling set by the regulators. Answer each of the following questions with complete explanations:

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