A local public transit (monopoly) sells monthly bus passes to adults and students. The demand elasticity for bus passes by adults is -0.25, whereas demand elasticity by students is -0.50. Their demand schedules are given in the following table:

P Q TR P Q TR

35 245 8575 35 268 9380

45 230 10350 45 238 10710

55 215 11825 55 208 114400

65 200 13000 65 178 11570

75 185 13875 75 148 11100

85 170 14450 85 118 10030

95 155 14725 95 88 8360

105 140 14700 105 58 6090

a.Currently, the transit is charging $85 for bus passes. What is the current total revenue?

b.Should the transit increase or decrease the price for adults? Should the transit increase or decrease the price for students?

c.What price will maximize the total revenue from adult customers?

d.What price will maximize the total revenue from student customers?

e.What would be the total revenue from both groups?

f.List and explain two conditions necessary for public transit to be able to successfully practice price discrimination.

The data for a monopolistically competitive firm is given below:

Quantity

Quantity P TR MR TC MC ATC Profit

1 72

2 68

3 64

4 60

5 56

6 52

7 48

8 44

a.Complete the above table.

b. What output will this monopolistically competitive firm produce?

c.Is this firm experiencing excess capacity? If yes, calculate how much.

I believe i have calculated the table correctly but am unsure.

Quantity P TR MR TC MC ATC Profit

1 72 72 72 72 72 72 0

2 68 136 64 136 64 68 0

3 64 192 56 192 56 68 0

4 60 240 48 240 48 60 0

5 56 280 40 280 40 56 0

6 52 312 32 312 32 52 0

7 48 336 24 336 24 48 0

8 44 352 16 352 16 44 0