De Beers’s demand curve is downward sloping because the lower the
price, more diamonds that will be bought by customers. Lowering the pric
means that the prices of all the diamonds must be lowered as well.
Therefore the marginal revenue of selling an additional diamond is less
than the price at which the additional diamond can be sold.
At $200 , De Beers was able to sell to Raquel, Jackie, and Joan. The price
effect is that De Beers loses $100 each from selling to them. So this effec
the revenue by a total of $300. The quantity effect is that De Beers sells on
more diamond to Mia, so this raises their revenue by $100.
MR = MC at a quantity of 2 diamonds. They will sell this at $300 each.
Both students and teachers will purchase the tickets, so there will be
1000 customers. Since the marginal cost is $3, the profit will be $2 per tic
($5 - $3 = $2). The total profit will be 1000 x $2 = $2000. Students will
experience no consumer surplus but the professors will have a consumer
surplus of $10 - $5 = $5. So the total consumer surplus will be $5 x 100 =
$500.
Only the professors will buy the tickets. There will be a profit of $10 - $3 =
$7. So the total profit will be $7 x 100 = $700. Students experience no
consumer surplus since they will not purchase the tickets. The teachers w
experience a consumer surplus of $0 since the tickets are being payed at
maximum willingness to pay.
, They will sell 900 tickets to students at a price of $5, and will earn a profit o
$2 per ticket. Therefore the total profit will be 900 x $2 = $1800. They will
also sell 100 tickets to professors at a price of $10 each. There will be a pr
of $7 per ticket, so the total profit will be $700. In total, there will be a profit
of $1800 + $700 = $2500. Since each customer is charged his or her
willingness to pay, no one experiences consumer surplus.
price, more diamonds that will be bought by customers. Lowering the pric
means that the prices of all the diamonds must be lowered as well.
Therefore the marginal revenue of selling an additional diamond is less
than the price at which the additional diamond can be sold.
At $200 , De Beers was able to sell to Raquel, Jackie, and Joan. The price
effect is that De Beers loses $100 each from selling to them. So this effec
the revenue by a total of $300. The quantity effect is that De Beers sells on
more diamond to Mia, so this raises their revenue by $100.
MR = MC at a quantity of 2 diamonds. They will sell this at $300 each.
Both students and teachers will purchase the tickets, so there will be
1000 customers. Since the marginal cost is $3, the profit will be $2 per tic
($5 - $3 = $2). The total profit will be 1000 x $2 = $2000. Students will
experience no consumer surplus but the professors will have a consumer
surplus of $10 - $5 = $5. So the total consumer surplus will be $5 x 100 =
$500.
Only the professors will buy the tickets. There will be a profit of $10 - $3 =
$7. So the total profit will be $7 x 100 = $700. Students experience no
consumer surplus since they will not purchase the tickets. The teachers w
experience a consumer surplus of $0 since the tickets are being payed at
maximum willingness to pay.
, They will sell 900 tickets to students at a price of $5, and will earn a profit o
$2 per ticket. Therefore the total profit will be 900 x $2 = $1800. They will
also sell 100 tickets to professors at a price of $10 each. There will be a pr
of $7 per ticket, so the total profit will be $700. In total, there will be a profit
of $1800 + $700 = $2500. Since each customer is charged his or her
willingness to pay, no one experiences consumer surplus.
