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E202PracticeExam3.1

# E202PracticeExam3.1 - demand for tickets the rest of the...

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Practice 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 New Delhi, India. 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
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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?...
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