-Refer to the figures above. Suppose the graphs represent the demand for use of a local golf course for which there is no significant competition (it has a local monopoly). P denotes the price of a round of golf and Q is the quantity of rounds sold each day. If the left graph represents the demand during weekdays and the right graph the weekend demand, how much economic profit will this profit-maximizing golf course earn over the course of a full seven-day week?
A) $4200
B) $3700
C) $3400
D) $2700

Question

-Refer to the figures above. Suppose the graphs represent the demand for use of a local golf course for which there is no significant competition (it has a local monopoly). P denotes the price of a round of golf and Q is the quantity of rounds sold each day. If the left graph represents the demand during weekdays and the right graph the weekend demand, how much economic profit will this profit-maximizing golf course earn over the course of a full seven-day week?
A) $4200 
B) $3700 
C) $3400 
D) $2700

Quizplus · Accepted Answer

The profit-maximizing price is $60, and the profit-maximizing quantity is 60 rounds per day. During the weekdays, the golf course will sell 60 rounds at $60 each, earning a total revenue of $3600. During the weekend, the golf course will sell 60 rounds at $60 each, earning a total revenue of $3600. Over the course of a full seven-day week, the golf course will earn a total revenue of $7200. The golf course's total cost is $3000, so its economic profit is $7200 - $3000 = $4200.

-Refer to the Figures Above