Scenario: Tobac Co. is a monopolist in the cigarette market in Nicotiana Republic, where the U.S. dollar is used as the official currency. The firm faces the demand curve shown below. The firm has a constant marginal cost of $2.00 per pack. The fixed cost of the firm is $50 million. To answer the questions below, it is useful to know that the equation of the (inverse) demand curve is P = 8 - 0.04Q, where Q is the quantity demanded (in millions of packs) and P is the price per pack (in $) . Also, you should draw in the marginal revenue curve.
-Refer to the scenario above.When the quantity sold goes up from 100 million to 150 million packs of cigarettes,the price effect on the firm's revenue is ________ and the quantity effect is ________.
Definitions:
SSE
Sum of Squares due to Error, a measure in statistics that quantifies the variance in an observed variable that is not explained by the predictive model.
Race Car Drivers
Individuals who operate cars specifically designed for competitive racing at high speeds.
Different Tracks
Courses or paths that are distinct from one another, often used in the context of education or music.
ANOVA Table
a table that summarizes the analysis of variance test results, used to determine if there are any statistically significant differences between the means of three or more independent groups.
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