2.5 Suppose that the inverse demand for San Francisco cable car rides is p = 10 - Q/1,000, where p is the price per ride and Q is the number of rides per day, and that the objective of San Francisco’s Municipal Authority (the cable car operator) is to maximize its revenues. What is the revenue-maximizing price? Suppose that San Francisco calculates that the city’s businesses benefit from tourists and residents riding on the city’s cable cars at $4 per ride.

If the city’s objective is to maximize the sum of the cable car revenues and the economic impact, what is the optimal price? C