In the market for flights from Gardermoen to Flesland, demand is given by: ? = 50 - 1/4 P The offer is fixed and determined by the authorities. It is given at X = 20.

(a) What will be the equilibrium price in this market? Draw the fit in a diagram where you measure NOK on the vertical axis and the number of flights on the horizontal axis.

(b) Now assume that the authorities open up for competition on the tender side so that the tender becomes: ? = 10 + ? What will be the equilibrium price and quantity traded now?

Draw the adaptation into the figure from task (a).

(c) Assume that the authorities want to reduce the number of flights back to 20. To do they shall apply a tax (charge) on the flights imposed on the offer of the number of flights. How big must this tax be? What will be the offer function now?

(d) Calculate the consumer price and the producer price after tax.