E202Exam3.1

E202Exam3.1 - demand for tickets the rest of the year is P...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Exam Three Name _____________________ Chapter 9 1. (5 pts) What is the socially desirable price for a natural monopoly to charge? Why will a natural monopoly that attempts to charge the socially optimal price invariably suffer an economic loss? 2. (15 pts) Suppose that an airline has a monopoly on direct flight service from Chicago to Shanghai, China. The demand curve for regular coach tickets during the summer is P = 2600 - 5Q, where P is the price of a ticket in dollars and Q is the number of tickets sold each day. The
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: demand for tickets the rest of the year is P = 2000 - 5Q. The marginal cost of an additional passenger, regardless of the season, is $200. a. Graph the demand curve during the summer and for the rest of the year. b. Graph the marginal cost curve for both markets. c. Derive and graph the marginal revenue curve during the summer and for the rest of the year. d. What price should the airline charge during the summer and for the rest of the year to maximize profits? How many tickets will be sold?...
View Full Document

This note was uploaded on 02/20/2012 for the course ECON 202 taught by Professor Brightwell during the Spring '08 term at Texas A&M.

Ask a homework question - tutors are online