A firm is considering buy a ferry. The cost of the construction is $2.5 million but it would cost nothing to maintain. The following table shows the firm's anticipated demand over the lifetime of the ferry:

Price per crossing Number of Crossing ('000)

$8 0

7 100

6 200

5 300

4 400

3 500

2 600

1 700

0 800

(a) Calculate the total revenue and marginal revenue for this firm if it were to buy this ferry. (4 points)

(b) If the firm was to buy the ferry, what would be its profit-maximizing price per crossing? Explain if the level of output is efficient. If not, what is?

(c) If the firm is interested in maximizing profit, should it buy the ferry? If it was to make the purchase, what would be its profit or loss?

(d) If the government were to provide the ferry service, what price should it charge? Give your reasoning.