Question
An airline's daily fixed cost of serving a particular route market is $5000. The demand curve in this market is P(Q) = 100 - 0.2Q
An airline's daily fixed cost of serving a particular route market is $5000. The demand curve in this market is P(Q) = 100 - 0.2Q where Q stands for number of passengers. When a uniform price is charged, the marginal revenue will be MR(Q) = 100 - 0.4Q. The marginal cost of operating flights in the market is MC(Q) = 120 - 0.6Q and the average variable cost is AVC(Q) = 120 - 0.3Q.
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Using Econometrics A Practical Guide
Authors: A. H. Studenmund
7th edition
013418274X, 978-0134182742
