+1-415-670-9189
info@expertsmind.com
Big ben taxis and whitehall taxis
Course:- Macroeconomics
Reference No.:- EM131198093




Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Macroeconomics

Got this question for practice, but unable to solve. any1 able to help?

Suppose that there are two rms competing in the market for taxi services. Big Ben Taxis has the marginal cost MCB = $9 per trip, and the xed cost FCB = $3,000,000. While Whitehall Taxis has the marginal cost MCW = $15 per trip, and the xed cost FCW = $1,000,000.
Inverse demand for taxi trips in the market is given by the function, P = 75 - (Q/10,000)

In this equation, P is the price of a taxi trip, and Q is the total quantity of taxi trips supplied by the two taxi companies.

Question 1: Find the equilibrium price and quantities for the case in which the two taxi companies engage in Cournot (quantity) competition. What prots will Big Ben Taxis and Whitehall Taxis earn.

Question 2: Using your answers to question 1, determine which rm has the greater market power.

Question 3: Now suppose that a rm can only supply taxi services if it purchases a licence from the government. What is the highest fee that the government can charge for a license, if the government wants both Big Ben Taxis and Whitehall Taxis to purchase a license? (Note: A licence does not place a limit on the number of taxi trips a company can supply. You should assume that both rms are charged the same fee.)

Question 4: If, instead, the government wants to maximise the revenue it receives from taxi license fees, how many licenses should it sell, and what fee should it charge?




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Macroeconomics) Materials
The local utility company applies a "declining block" rate structure for its industrial consumers, that lower unit price is charged for higher quantity blocks of electricity
The Ice cream Parlor is the only ice cream parlor in Smithtown. Michael, the son of the owner, has just come back from college, where he majors in business administration. I
Make sure to select articles (300 words or more) that address all of the needed information below. Short articles will often not provide you with enough detail to write abou
According to the life-cycle hypothesis, what is the typical pattern of saving for an individual over his or her lifetime What impact does this behavior have on an individual
Over the past decade, many media articles have discussed the topics of "Coutsourcing" and "Cemerging markets", voicing concerns about U.S. deficits and debt and the impact o
Write the equations for the IS and LM schedules. Find the equilibrium values for Y and r. Now assume the same figures as above but with a completely interest inelastic Investm
Elucidate the difference between a monopoly and an oligopoly, and a cartel. Provide an example of a monopoly, an oligopoly, and a cartel. Describe the welfare effects of monop
Suppose that Wal-World and Tarbo are independently deciding whether to implement a new bar code technology. It is less costly for their suppliers to use one system and the f