Question
I need assistance with the following as I am finding it confusing: This is the relevant facts: D1 = 3000-200P1+30P2+2Y Where demand represents plane trips,
I need assistance with the following as I am finding it confusing:
This is the relevant facts:
D1 = 3000-200P1+30P2+2Y
Where demand represents plane trips, P1 is the price of plane trips, P2 is the price of train trips and Y is average annual consumer income. Suppose supply is
S1=300P1
D1=S1 As the market clears
Assume Y average income is $80000 and the price of train trips is P2 = $500. Further assume the market always clears.
- What is the equilibrium price of plane trips?
- How many plane trips are provided and purchased?
- Present the relevant diagram.
- Calculate the producer surplus for the airline companies.
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Economics
Authors: David Colander
7th Edition
0073402869, 9780073402864
