Major Tom's Space Flights offers commercial space flights to people willing to pay for a seat on his rocket ship. Major Tom currently has a monopoly on commercial space travel. The demand for seats on his rocket ship and the cost information are shown in the table and graph below.
Major Tom's Space Flights offers commercial space flights to people willing to pay for a seat on his rocket ship. Major Tom currently has a monopoly on commercial space travel. The demand for seats on his rocket ship and the cost information are shown in the table and graph below.
Chapter9: Monopoly
Section: Chapter Questions
Problem 7SQP
Related questions
Question
refer to image
answer B,C, and D
Transcribed Image Text:Instructions: Enter your answers as a whole number.
a. For Major Tom's Space Flights, the profit-maximizing level of output is
seats and the profit-maximizing price is $
million.
b. In the market for Major Tom's Space Flights, the allocatively efficient level of output is
price is $
seats and the allocatively efficient
million.
c. If the market for space flight seats were to go from the monopoly solution to the allocatively efficient solution, the change in
consumer surplus would be $
million.
d. Using the graph, identify the area of deadweight loss that results from Major Tom having a monopoly in commercial space flight.
Instructions: Use the tool provided "Deadweight Loss" to illustrate this area on the graph above.
Transcribed Image Text:Major Tom's Space Flights offers commercial space flights to people willing to pay for a seat on his rocket ship. Major Tom currently
has a monopoly on commercial space travel. The demand for seats on his rocket ship and the cost information are shown in the table
and graph below.
Major Tom's Market for Space Travel
Price (millions of
dollars)
$34
Quantity Demanded Marginal Revenue (millions Marginal Cost(millions of
(seats)
of dollars)
dollars)
32
$32.00
$5.60
30
2
28.00
6.00
28
3
24.00
6.40
26
20.00
6.80
24
16.00
7.20
22
12.00
7.60
20
7
8.00
8.00
18
8
4.00
8.40
16
9
0.00
8.80
14
10
-4.00
9.20
12
11
-8.00
9.60
10
12
-12.00
10.00
Market for Seats on Rocket Ship
$35
Tools
$30
Deadweight L
$25
$20
$20
$15
$10
MC
$10
$5
7
MR
12
6 8
10
12
14
16
Quantity (seats)
Price (millions of dollars)
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