Suppose that United Airlines has a monopoly on the route between Chicago and Omaha, Nebraska. During the

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Suppose that United Airlines has a monopoly on the route between Chicago and Omaha, Nebraska. During the winter (December-March), the monthly demand on this route is given by P = a1 - bQ. During the summer (June-August), the monthly demand is given by P = a2 - bQ, where a2 > a1. Assuming that United's marginal cost function is the same in both the summer and the winter, and assuming that the marginal cost function is independent of the quantity Q of passengers served, will United charge a higher price in the summer or in the winter?
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Microeconomics

ISBN: 978-0073375854

2nd edition

Authors: Douglas Bernheim, Michael Whinston

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