You own a private parking lot near City University with a capacity of 600 cars. The demand for parking at this lot is estimated to be Q=1,000 - 2P, where Q is the number of customers with monthly parking passes and P is the monthly parking fee per car.

1. Derive your marginal revenue schedule.

[4 marks]

1. What price generates the greatest revenues?

[3 marks]

Your fixed costs of operating the parking lot, such as the monthly lease paid to the landlord are 25,000 per month. In addition, your insurance company charges you 20 per car per month for liability coverage and the City of London charges you 30 per car per month as part of its policy to discourage the use of private cars in the city centre.

1. What is your profit maximising price?