QUESTION 3 48 44 40 36 32 28 24 20 16 12 0040 $ 8 a MC MR d ATC AVC D 0 T Q 0 4 8 12 16 20 24 28 32 03. Which point will be the most likely choice imposed by a politically appointed government regulator charged with approving a monopoly utility's prices? a) Point a Ob) Point b Oc) Point c d) Point d Oe) Pointe

QUESTION 3 48 44 40 36 32 28 24 20 16 12 0040 $ 8 a MC MR d ATC AVC D 0 T Q 0 4 8 12 16 20 24 28 32 03. Which point will be the most likely choice imposed by a politically appointed government regulator charged with approving a monopoly utility's prices? a) Point a Ob) Point b Oc) Point c d) Point d Oe) Pointe

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The second-order condition for a monopoly maximizing its profit is:
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Problem 3 uppose an airline has monopoly over a certain route. The estimated price elasticity of demand for business travelers is E-12, while the price elasticity of demand for leisure travelers is Ey-24. The airline wants to set the prices separately for business and vacation travelers. Economy Firat Class Only i the marginal cost of transporting each passenger is the same, und the airline is able to separate the two groups perfoctly, what is the optimal surcharge (in ) on business travelers? Oor example. fleiture travelers pay 100, and business ravelers pay 200, then the surcharge is 100%) Anvwer b) Suppose that in order to separste business travelen, the airline must offer them slightly better conditions on board (for enample, serve them a meal). As a resul, the marginal cost of flying a basiness traveler is 30% higher than for a leivare traveler. What is the optimal surcharge (in ) on business fravelers in this case? Awwer Now suppose the airline introdaces a Basi Economy fare,…
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