1.Construct a market for an airline that has a legal monopoly on service between two destinations. Draw the demand curve, marginal revenue, and marginal cost curves for the firm. Identify the quantity of output the firm supplies and the price it charges labelling both as q1 and p1.

1b. Assume the price of jet fuel increases. Return to the diagram in A and shift all appropriate curves given this change. Label all new curves subscript "2" and note the new equilibrium price and quantity with subscript "2".

1c.What is the effect on demand and the firm's marginal revenue from change in jet fuel.

Amazon, a $600 billion company, first made its name selling books online, but has rapidly morphed into an "everything store" with its hands in just about every retail sector in America. Its large scale of operationsefficiencies of scale--are cited as the reason Amazon commands such a huge share of all online sales and is able to set prices without competitive constraint.

A.List the three barriers to entry and provide a present or former example of each.

B.Assume across the entire market for online products the average cost curve of Amazon declines.Draw the demand curve, marginal revenue, and marginal cost curves for Amazon.Identify the quantity of output by Amazon and the price it charges absent competition.

C.Assume Amazon wants to limit entry into online sales from other competitors, and that entry is possible. Identifythe quantity of output by Amazon and the price it charges facing potential competition.Justify your price strategy.