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# The residents of the town Ectenia all love economics and the mayor proposes building an economics museum The museum has a fixed cost of

The residents of the town Ectenia all love economics, and the mayor proposes building an economics museum. The museum has a fixed cost of \$2,000,000 and no variable costs. There are 100,000 town residents, and each has the same demand for museum visits: Q

D

=12−P

QD=12−P, where P

P is the price of admission.

On the following graph, use green points (triangle symbol) to graph the museum&#39;s average-total-cost curve at the following quantities: 1,000 visits, 2,000 visits, 4,000 visits, 5,000 visits, 10,000 visits, and 20,000 visits. Then use the orange line (square symbol) to graph the museum&#39;s marginal-cost curve.

Average Total Cost

Marginal Cost

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Costs

Visits (Thousands)

What kind of market would describe the museum?

Single-price monopoly

Perfectly competitive market

Natural monopoly

The mayor proposes financing the museum with a lump-sum tax of \$20 and then opening the museum to the public for free.

Under this system, each person would visittimes. The benefit each person would get from the museum would be. ( Hint : You can measure the benefit as consumer surplus minus the new tax.)

The mayor&#39;s anti-tax opponent says the museum should finance itself by charging an admission fee.

The lowest price the museum can charge without incurring losses is. ( Hint : Find the number of visits and museum profits for prices of \$1, \$2, \$3, and \$4.) At this price, each resident&#39;s consumer surplus is.

Which of the following statements are true? Check all that apply.

Total societal welfare is better with the admission fee than under the mayor&#39;s plan.

Revenue per person is the same regardless of whether an admission fee or the mayor&#39;s plan is used.

Consumers are worse off with the admission fee than under the mayor&#39;s plan.

Apr 23 2020 View more View Less