Hot Air Balloon Rides is a single-price monopoly. Columns 1 and 2 of the table set out themarket demand schedule and columns 2 and 3 set out the total cost schedule.P (dollars per ride)Qd (rides per month)TC (dollars per month)220200116018026016038014045201205680a. Construct Hot Air's total revenue and marginal revenue schedules. (and marginal costschedule.)b. Draw a graph of the market demand curve and Hot Air's marginal revenue curve.c. Find Hot Air's profit-maximizing output and price and calculate the firm's economicprofit.d. If the government imposes a tax on Hot Air's profit, how do its output and price change?e. If instead of taxing Hot Air's profit, the government imposes a sales tax on balloon rides ofS30 a ride, what are the new profit-maximizing quantity, price, and economic profit?

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and marginal revenue schedules. (and marginal c and curve and Hot Air's marginal revenue curve. g output and price and calculate the firm's econom on Hot Air's profit, how do its output and price ch fit, the government imposes a sales tax on balloom

and marginal revenue schedules. (and marginal c and curve and Hot Air's marginal revenue curve. g output and price and calculate the firm's econom on Hot Air's profit, how do its output and price ch fit, the government imposes a sales tax on balloom

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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