MYECON LAB W/PEARSON ETEXT MICROECON>IP
9th Edition
ISBN: 9780134153988
Author: PINDYCK
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 11, Problem 6E
(a)
To determine
The profit maximizing price of the airlines, and the flyers and profit from each flight.
(b)
To determine
The existence of the airline firm in business.
(c)
To determine
The existence of the airline firm in business when the price discriminates.
(d)
To determine
The profit of the airline firm in business when the price discriminates.
(e)
To determine
The
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Joe Smiley buys his mobile phone services from Sprint, the sole provider in his state of Wyoming.
Sprint offers the following pricing plans: a fee of 10 dollars per month and 50 minutes of free calls per month or a fee of 20 dollars per month and 100 minutes of free calls.
Under both plans the price of additional calls is 25 cents per minute.Joe Smiley's demand curve for mobile phone services is P=100 - 0.5Q where P is measured in cents/minute and Q is measured in minutes per month.
a) suppose Joe Smiley subscribes to the first plan (10 dollar fee and 50 free minutes) (i) how much calling time would he consume? (ii) what would be his total benefit? What would be his surplus?
b) suppose Joe Smiley subscribes to the second plan (20 dollar fee and 100 free minutes) (i) how much calling time would he consume? (ii) what would be his total benefit? What would be his surplus?
c) which plan would Joe Smiley choose? He will choose plan (b) because it maximizes his surplus
What is the Difference between predatory pricing, tie-in sales, and bundling?
At what Price should All Firms Produce at?
What should a Firm do for Pricing if it faces Elastic or Inelastic Demand?
Joe Smiley buys his mobile phone services from Sprint, the sole provider in his state of Wyoming. Sprint offers the following pricing plans: a fee of 10 dollars per month and 50 minutes of free calls per monthor a fee of 20 dollars per month and 100 minutes of free calls. Under both plans the price of additional calls is 25 cents per minute. Joe Smiley's demand curve for mobile phone services is P=100 - 0.5Q where P is measured in cents/minute and Q is measured in minutes per month. Answer the following questions: a) suppose Joe Smiley subscribes to the first plan (10 dollar fee and 50 free minutes)(i) how much calling time would he consume? (ii) what would be his total benefit? What would be his surplus? b) suppose Joe Smiley subscribes to the second plan (20 dollar fee and 100 free…
Chapter 11 Solutions
MYECON LAB W/PEARSON ETEXT MICROECON>IP
Ch. 11.A - Prob. 3ECh. 11 - Prob. 1RQCh. 11 - Prob. 2RQCh. 11 - Prob. 3RQCh. 11 - Prob. 4RQCh. 11 - Prob. 5RQCh. 11 - Prob. 6RQCh. 11 - Prob. 7RQCh. 11 - Prob. 8RQCh. 11 - Prob. 9RQ
Ch. 11 - Prob. 10RQCh. 11 - Prob. 11RQCh. 11 - Prob. 12RQCh. 11 - Prob. 13RQCh. 11 - Prob. 14RQCh. 11 - Prob. 15RQCh. 11 - Prob. 1ECh. 11 - Prob. 2ECh. 11 - Prob. 3ECh. 11 - Prob. 4ECh. 11 - Prob. 5ECh. 11 - Prob. 6ECh. 11 - Prob. 7ECh. 11 - Prob. 8ECh. 11 - Prob. 9ECh. 11 - Prob. 10ECh. 11 - Prob. 11ECh. 11 - Prob. 12ECh. 11 - Prob. 13ECh. 11 - Prob. 14ECh. 11 - Prob. 15ECh. 11 - Prob. 16ECh. 11 - Prob. 17E
Knowledge Booster
Similar questions
- Suppose an ocean-front hotel rents rooms. In the winter, demand is: P1=50−1Q1 with marginal revenue of: MR1=50−2Q1. However, in the summer, demand is: P2=140−1Q2 with marginal revenue of:: MR2=140−2Q2. Furthermore, suppose the hotel's marginal cost of providing rooms is MC=5+1Q, which is increasing in Q due to capacity constraints. Suppose the hotel engages in peak-load pricing. During the winter, the profit-maximizing price is $35 and the profit-maxizing quantity is 15 rooms. (Enter numeric responses rounded to two decimal places.) During the summer, the profit-maximizing price is $_____ and the profit-maximizing quantity is _________.arrow_forwardSuppose an ocean-front hotel rents rooms. In the winter, demand is: P1=50−1Q1 with marginal revenue of: MR1=50−2Q1. However, in the summer, demand is: P2=140−1Q2 with marginal revenue of:: MR2=140−2Q2. Furthermore, suppose the hotel's marginal cost of providing rooms is MC=5+1Q, which is increasing in Q due to capacity constraints. Suppose the hotel engages in peak-load pricing. During the winter, the profit-maximizing price is $______and the profit-maxizing quantity is______rooms. (Enter numeric responses rounded to two decimal places.)arrow_forwardIn some cities, Uber has a monopoly on ride-sharing services. In one of these cities, the demand curve on weekdays is given by P = 50 - Q. However, during weekend nights, or surge hours, the demand for rides increases dramatically and the new demand curve is P = 100 - Q. Assume that the marginal cost and the total fixed cost are both zero. 1. Determine the profit maximizing price during weekdays and during surge hours. 2. Determine the profit maximizing price during weekdays and during surge hours if MC = 10 instead of zero. 3. Draw a graph showing the demand, marginal revenue, and marginal cost curves during surge hours from part (2), indicating the profit maximizing price and quantity. Determine Uber’s profit and the DWL during surge hours, and show them on a graph. ANSWER ALL PARTS THANKSarrow_forward
- Promoters of a major college basketball tournament estimate that the demand for tickets by adults is QA = 5,000 - 10P and the demand for tickets by students is QS = 10,000 - 100P. The marginal cost and average total cost of seating an additional spectator is constant, MC = $10, The promoters want to segment the market and charge adults and students different prices. What is the profit maximizing ticket price for students?arrow_forwardSuppose you own fast food takeaway shops, one in Glebe, with lots of competition, and one in Tibooburra, with little competition. In Glebe, the price elasticity of demand is -2.5, while in Tibooburra, it is -2.0. Assume the marginal cost of providing a combo burger is $10. What are the optimal prices of a combo burger in each location?arrow_forwardAssume marginal cost is $40 in the summer and also in the winter. The daily demand for hotel rooms is given by p = 140 – q in summer and p = 100 – q in winter. There are only 40 rooms in the hotel. Which statement is true? A. The deadweight loss is positive in winter but zero in summer. B. The profit-maximizing price in summer = $90. C. The profit-maximizing price in winter = $60. D. The deadweight loss in both seasons are equal.arrow_forward
- Ilia is driving home from work. She needs to buy gas and notices an Exxon-Mobil station on one side of the street and a Shell station on the other side of the street. Although run by different companies, the two stations sell gasoline at the same price. a. The most likely reason that the price is the same is that _gas stations always make a profit, so they can charge any price they want. _drivers need gas and are willing to pay whatever price a gas station charges. _government regulation requires both gas stations to charge the same price. _consumers view gasoline from different gas stations as perfect substitutes. b. If one station increases its price, _it will be fined by the government. _it will sell more gasoline. _it will make a higher profit. _it will lose customers to the cheaper station across the street.arrow_forwardA company can successfully charge different prices in country A and B. Marginal cost is $10. Demands in country A and B are Q=20.5-P and Q=5-P respectively. What are the profit- maximising prices in two countries? What quantity do they sell in two countries? The company now added country C, and its demand is Q=20.5-P. What maximising prices do they charge in three countries? What quantity do they charge in three countries?arrow_forwardThe demand for seats per game, at a local stadium that seats a maximum of 40 million per game, is P = 22 – 0.2Q where P is the price of a ticket and Q represents the number of seats (expressed in millions). Assume that all seats and all games are the same, and marginal cost = $10 = average cost. Calculate the maximum profit per game if the local stadium is owned by a monopolist charging the same price for each seat.arrow_forward
- The graph below shows the daily demand curve for fresh spring water in a remote mountain village in the land of Far Country. The only spring is controlled by the village chief who earns revenue from the sale of water in order to cover the costs of running the village. The villagers bring their own jugs and pay a price per jug as they leave. a. What quantity of jugs would be sold each day in order to maximize his total revenue? Quantity: b. What price would the chief charge? Price: $ c. What is MR at this price and quantity? MR: d. Assuming no marginal costs, what price would the chief charge in order to maximize his total profits? Price: $arrow_forwardWhether in the case of clothes and cars or in the case of universities, producers spend a lot of money establishing their "brand names" because: Group of answer choices Brand names are established by driving out the competition, after which these companies charge monopoly prices. Government legislation raises the prices of brand named items with price controls, and people have no choice but to pay the higher price for brand name products. There are legal requirements for companies with brand names to spend a percentage of their budget on advertising. Brand names carry a reputation of better quality, and consumers will pay a higher price for brand names.arrow_forwardA monopoly sells its good in the United States, where the elasticity of demand is −2.5, and in Japan, where the elasticity of demand is −5.3. Its marginal cost is $7. At what price does the monopoly sell its good in each country if resales are impossible? The price in the United States is $_____. (Round your answer to the nearest penny.) The price in Japan is $____. (Round your answer to the nearest penny.) Only typed answerarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning