1880 Town is a tourist attraction in Midland, SD. Owners of this attraction have collected buildings built between 1880 and 1920, filled them with antique furniture and collectibles, and charge admission for tourists to experience history. Because of the exclusivity and location 1880 Town, this tourist attraction enjoys a measure of monopoly power.
Suppose you run a tourist attraction similar to 1880 Town. After running some tests with pricing, you have formulated a daily demand schedule for admission as given. In addition to tracking demand at various price levels, you also monitor costs closely.
a) Using the demand schedule provided, find total revenue and marginal revenue at each point.
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b) Using total costs, find marginal costs at each point. (Just as marginal revenue is the change in total revenue divided by a change in Q, marginal cost is the change in total cost divided by a change in Q.)
c) How much should you charge for entrance to the tourist attraction and how many visitors do you expect to have?
d) What is profit at this point?
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