Assume that the employers' association for Norwegian airlines has estimated thefollowingDemand function for airline seats per day on an average flight route in NorwayMarket: p = 4000 - 0.1xP. The offer of airline seats is given by this function:X* = 5p -5000.P: The average price of a flightXD: The demand for airline seats per dayX$ The offer of airline seats per dayAssume that all players act as prize winners.(a) Find equilibrium price and equilibrium quantity in this market, bothgraphically and using Math's(b) Find the marginal willingness to pay when 5,000 airline seats are requesteddaily. (c) Explain why the solution you found in sub-task a is socio-economicallyoptimal.(d) Find the size of the consumer surplus, the producer surplus and thatSocio-economic surplus.(e) Now assume that the Norwegian authorities impose a minimum price ofNOK 3,500 on the airlines. Per airplane seat. How big will then be the demandfor airline seats, and how many airline seats want airlines to offer? Whatquantity is traded if you assume that publicly support purchase is not relevant?(f) Assume here that the quantity sold is similar to the one you found in probleme). Find the consumer surplus, the producer surplus and the socio-economic theprofit at a minimum price of DKK 3,500. Which group (s) earn and which (s)group (s) lose on the introduction of the minimum price?

Demand : p= 4000 - 0.1x x = 40000 - 10p Supply: x = 5p - 5000

following Demand function for airline seats per day on an average flight route in Norway Market: p = 4000 - 0.1xP. The offer of airline seats is given by this function: X = 5p -5000. P: The average price of a flight XD: The demand for airline seats per day XS The offer of airline seats per day Assume that all players act as prize winners. (a) Find equilibrium price and equilibrium quantity in this market, both graphically and using Math's (b) Find the marginal willingness to pay when 5,000 airline seats are requested daily.

following Demand function for airline seats per day on an average flight route in Norway Market: p = 4000 - 0.1xP. The offer of airline seats is given by this function: X = 5p -5000. P: The average price of a flight XD: The demand for airline seats per day XS The offer of airline seats per day Assume that all players act as prize winners. (a) Find equilibrium price and equilibrium quantity in this market, both graphically and using Math's (b) Find the marginal willingness to pay when 5,000 airline seats are requested daily.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter6: Demand Relationships Among Goods

Section: Chapter Questions

Problem 6.4P

See similar textbooks

Similar questions

The steps for solving a maximization problem can include A. Using the constraints to eliminate some variables B. Finding the partial derivatives with respect to controls or choices C. Solving the FOC for the optimal choice D. All of the Above The definition of competitive equilibrium is A. A fight among firms that has drawn to a tie B. Allocations and prices such that all agents behave optimally and markets clear C. An economy in which each firm monopolistically sets prices D. Where the governmental exogenously sets prices to maximize welfare
Let's say that the demand side of the market for Blue Soda is comprised of 3 leading agents/individuals: Anthony, Brad, and Claire. Let P be the price of 1 liter of Blue Soda, and Qd be the quantity demanded of Blue Soda in liters. Here are the key points to the problem: - Anthony buys only one liter of Blue Soda if the price of it falls below his choke price of $10. - Brad's demand for Blue Soda is defined by QdB = 5 - P/2 - Claire buys 2 liters if the price is below $5, 1 liter if the price is between $5 and $10, and nothing if the price is above $10. Using this information, please sketch the individual demands and the market demand by aggregating the three agents/individuals. Label the graph clearly. Please make sure to sketch the individual demands first and then sketch the market demand.
A manager of a nightclub realizes that demand for drinks is more elastic among students and is trying to determine the optimal pricing schedule. Specifically, he estimates the following average demand for his customer types: Under 25: q^r=18-5pOver 25: q=10-2p The two age groups visit the nightclub in equal numbers on average. Assume that drinks cost the club $2 to make. A) suppose that once again it is impossible to identify which group the customers belong. Suppose the manager lowers the price of drinks to equal to marginal cost and still wanted to attract both customers, what entry fee would the manager set?
A friend of yours is considering two cell phone service providers. Provider A charges $110 per month for the service regardless of the number of phone calls made. Provider B does not have a fixed service fee but instead charges $1 per minute for calls. Your friend's monthly demand for minutes of calling is given by the equation QD=100−20P, where P is the price of a minute. With Provider A, the cost of an extra minute is With Provider B, the cost of an extra minute is Given your friend's demand for minutes and the cost of an extra minute with each provider, if your friend used Provider A, he would talk for ___ minutes, and if he used Provider B, he would talk for ____ minutes. This means your friend would pay___ for service with Provider A and ____ for service with Provider B. Use the following graph to draw your friend's demand curve for minutes. Then use the green triangle to help you answer the questions that follow. Your friend would…
Suppose that each person's demand for a project can be expressed as P = 100 - 20Q. Suppose that the firm wants to use two-part pricing. If the firm charges a price of $40 per unit, what is the maximum that the firm can charge in the fixed fee F?
You estimate that a typical consumer’s inverse demand function is P=200-20Q and your cost function is C=80Q. Determine the optimal two-part pricing strategy. How much will 4 consumers pay?
Analyze the demand function for Toyotas in problem C4, page 82. Please also read “What is a Symbol” located in the folder with this assignment. This function is: QT = 200 -.01PT +.005PM -10PG +.01I +.003A Where: QT = quantity purchased PT = average price of Toyotas PM = average price of Mazdas PG = price of gasoline I = per capita income A = dollars spent annually on advertising Characterize this function by circling all in the following list that are applicable: univariate, bivariate, multivariate, linear, exponential, logarithmic, curvilinear, 1st degree, 3rd degree, additive, multiplicative, linearly homogeneous What is the numerical value of the partial derivative of the function with respect to the price of gasoline (PG) (be sure to also include the + or – sign. Note: I do not want the symbol for this partial derivative)? Write the mathematical symbol representing the coefficient of income (I) (the numerical…
only typed answer Q1 Assume that the demand curve D(p) given below is the market demand for widgets: Q=D(p)=1291−14pQ=D(p)=1291-14p, p > 0 Let the market supply of widgets be given by: Q=S(p)=−5+10pQ=S(p)=-5+10p, p > 0 where p is the price and Q is the quantity. The functions D(p) and S(p) give the number of widgets demanded and supplied at a given price. What is the equilibrium price? Please round your answer to the nearest hundredth. What is the equilibrium quantity? Please round your answer to the nearest integer. What is the total revenue at equilibrium? Please round your answer to the nearest integer.
A friend of yours is considering two cell phone service providers. Provider A charges $110 per month for the service regardless of the number of phone calls made. Provider B does not have a fixed service fee but instead charges $1 per minute for calls. Your friend's monthly demand for minutes of calling is given by the equation QD=100−20PQD=100−20P, where PP is the price of a minute. With Provider A, the cost of an extra minute is . With Provider B, the cost of an extra minute is . Given your friend's demand for minutes and the cost of an extra minute with each provider, if your friend used Provider A, he would talk for minutes, and if he used Provider B, he would talk for minutes. This means your friend would pay for service with Provider A and for service with Provider B. Use the following graph to draw your friend's demand curve for minutes. Then use the green triangle to help you answer the questions that follow. Note: You will not be graded…
A friend of yours is considering two cell phone service providers. Provider A charges $100 per month for the service regardless of the number of phone calls made. Provider B does not have a fixed service fee but instead charges $0.5 per minute for calls. Your friend's monthly demand for minutes of calling is given by the equation QD=160−80PQD=160−80P, where PP is the price of a minute. With Provider A, the cost of an extra minute is . With Provider B, the cost of an extra minute is . Given your friend's demand for minutes and the cost of an extra minute with each provider, if your friend used Provider A, he would talk for minutes, and if he used Provider B, he would talk for minutes. This means your friend would pay for service with Provider A and for service with Provider B. Use the following graph to draw your friend's demand curve for minutes. Then use the green triangle to help you answer the questions that follow
Two firms, Incumbent & Entrant, can produce the same good. The market demand for the good is given by P = 180 – Q, where P is the market price and Q is the market quantity demanded. The firms must pay w = 45 per unit of output for labour and r = 45 per unit of output for capital (one unit of capital is used per unit of output), but Incumbent may choose capacity KI units of capital before Entrant decides whether to enter the market. Suppose firms each have fixed costs FI =600, FE=500. Incumbent chooses (as a Stackelberg leader) capacity KI equal to the monopoly profit- maximizing quantity. When you answer the following questions, show your work. a. Would Incumbent be able to prevent entry by choosing capacity KI equal to the monopoly profit-maximizing quantity? Explain. b. What is the Incumbent’s equilibrium choice of capacity KI in this Dixit game? c. Does the Incumbent’s choice of capacity KI in part (b) qualify as predatory conduct (here, limit output)? Explain.
A friend of yours is considering two cell phone service providers. Provider A charges $100 per month for the service regardless of the number of phone calls made. Provider B does not have a fixed service fee but instead charges $1 per minute for calls. Your friend's monthly demand for minutes of calling is given by the equation QD=120−30PQD=120−30P, where PP is the price of a minute. With Provider A, the cost of an extra minute is ? With Provider B, the cost of an extra minute is ? Given your friend's demand for minutes and the cost of an extra minute with each provider, if your friend used Provider A, he would talk for ?? minutes, and if he used Provider B, he would talk for ?? minutes This means your friend would pay for service with Provider A and for service with Provider B. Use the following graph to draw your friend's demand curve for minutes. Then use the green triangle to help you answer the questions that follow. Your friend would obtain in consumer surplus…