1. Suppose that a company has estimated the average variable cost of producing its product to be $10. The firm's total fixed cost is $100,000. If the company produces 1,000 units and its pricing strategy is to add a 35 percent markup, what price would the company charge?

1. The Interboro Rapid Transit Authority (IRTA) has estimated the following peak and off-peak demand equations for its commuter rail service:

Qp=502Pp

Qop=204Pop

Where Q is measured in thousands of passenger miles. IRTA's marginal cost of providing commuter rail service is constant at $3 per passenger mile. IRTA's capacity is 20 thousand passenger miles, which it reaches during peak, rush hours. What fare should IRTA change during peak and off-peak hours?