Suppose that airlines compete for customers on flights between Chicago and Los Angeles. The total number of passengers flown by the firms, Q, is the sum of the number of passengers flown by each firm. We assume all firms are identical and face the same costs. Our estimate of the market demand function is Q=449-p. where price, p, is the dollar cost of a one-way flight, and total quantity of the airlines combined, Q, is measured in thousands of passengers flying one way per quarter. Each airline has a constant marginal cost, MC, of $139 per passenger per flight. What fixed cost would result in four firms operating in the monopolistically competitive equilibrium? What are the equilibrium quantities and prices? The Cournot equilibrium quantity for each of the four firms is q= thousand passengers per quarter. (Enter your response rounded to two decimal places.) please also solve for equilibrium price and F (fixed costs per firm)
Suppose that airlines compete for customers on flights between Chicago and Los Angeles. The total number of passengers flown by the firms, Q, is the sum of the number of passengers flown by each firm. We assume all firms are identical and face the same costs. Our estimate of the market demand function is Q=449-p. where price, p, is the dollar cost of a one-way flight, and total quantity of the airlines combined, Q, is measured in thousands of passengers flying one way per quarter. Each airline has a constant marginal cost, MC, of $139 per passenger per flight. What fixed cost would result in four firms operating in the monopolistically competitive equilibrium? What are the equilibrium quantities and prices? The Cournot equilibrium quantity for each of the four firms is q= thousand passengers per quarter. (Enter your response rounded to two decimal places.) please also solve for equilibrium price and F (fixed costs per firm)
Chapter15: Imperfect Competition
Section: Chapter Questions
Problem 15.4P
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