Under which system are profits higher?
Under which system is ride usage higher?
transportation company hauls both coal and manufactured goods.
Suppose that it faces a demand for hauling a ton of coal given by P
) = 495 - 5Q
= 495 - 10Q
) = 795 - 10Q
and therefore MR
= 795 - 20Q
a ton of
All abbreviations are as defined in class and subscripts represent variables
associated with hauling coal (c) and manufactured goods (m).
The firm’s marginal cost, regardless of which product is hauled, is equal to $195 per ton and can be
assumed to be constant with regard to the amount hauled.
Determine the prices the firm should set for coal and manufactured goods in order to
If the firm were required by its regulators to charge the same price to regardless of what is
hauled, what impact would this have on firm profits?