Elasticity and Incentives

Question 1

Using this table, calculate the marginal cost of each of these quantities of bikes. The first bike: $ The fourth bike: $ The sixth bike: $ The seventh bike: $

Revolt · Accepted Answer

Part 1: 80; Part 2: 20; Part 3: 50; Part 4: 60

Question 2

This graph shows the marginal cost of producing each bike. Select the correct answer from the options available.Based on this graph, which bike has a marginal cost of $20?

Revolt · Accepted Answer

Bike 4

Question 3

Using this table, calculate the profit at each level of bicycle production. One bike: -$ Two bikes: $ Three bikes: $ Four bikes: $ Five bikes: $ Six bikes: $ Seven bikes: $

Revolt · Accepted Answer

Part 1: 30; Part 2: 3; Part 3: 40; Part 4: 70; Part 5: 90; Part 6: 90; Part 7: 80

Question 4

This graph shows the marginal costs of each bike, along with the market price. Select the correct answer from the options available.Based on this graph, at which level of production does the producer’s profit stop increasing?

Revolt · Accepted Answer

bike 7

Question 5

Write three to five sentences explaining which levels of production provide Alonzo’s Cycling with the maximum profit.

Revolt · Accepted Answer

Alonzo’s Cycling earns a maximum profit of $90 when it produces 5 bikes per day or 6 bikes per day. These two production levels tie for the highest profit in the table. Producing any other listed number of bikes results in a lower profit.

Elasticity and Incentives Answers

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