Question
British Airways is a monopolist flying from London to Edinburgh. Suppose that there are 20,000 potential customers with valuations uniformly distributed between 0 and 1000.
British Airways is a monopolist flying from London to Edinburgh. Suppose that there are 20,000 potential customers with valuations uniformly distributed between 0 and 1000. A passenger will fly if her valuation is more than BA's price.
a) How many seats will BA sell if it sets a single price of 550?
b) equation for BA's demand curve. c) If marginal cost is 100, what is the profit-maximizing price and quantity? What is consumer surplus and total welfare?
3. Suppose that BA can perfectly price discriminate. Using the specification in Question 2, a) What is the profit-maximizing quantity now? b) What is consumer surplus and total welfare
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
