equalibrian, Microeconomics

Assignment Help:
Imagine a country where plane and train services between two main cities are both provided by private companies, and, from a consumer perspective these services are viewed as substitutes.
The demand for plane trips is:
(1)
Where D1 is annual demand for plane trips, P1 is price of plane trips, P2 is price of train trips and Y is average annual income.
Assume the supply of plane trips by the aviation industry can be described by:
(2)
Where S1 is plane trips per year and the market clears so:
(3)
Assume average annual income, Y, is $75,000 and the price of train trips is P2 = $500. Further, assume the market always clears, there are no empty planes or theft of rides and producers are competitive. Ignore externalities such as anti-social behaviour and pollution.
Answer the following questions:

1. What is the equilibrium price of plane trips?
2. How many plane trips are provided and purchased?
3. Calculate the producer surplus for the plane trips providers (airways companies).

Related Discussions:- equalibrian

Price, why sellers and producers keep pricess lower

why sellers and producers keep pricess lower

What are the possible advantages of free trade, What are the possible advan...

What are the possible advantages of free trade? Firms a)  Specialisation and enhanced use of comparative advantage b)  Possibility of advantages of scale c)  Spread

Explain tragedy of commons-tax incidence-elasticity, 1. Explain- a. Trag...

1. Explain- a. Tragedy of commons b. Free rider problem c. Diminishing marginal utility d. Diseconomies of scale e. Tax incidence f.  Elasticity g. Gains from

Quantity supply, factor influencing quantity supplied

factor influencing quantity supplied

Total Product, Why total product continues to increase despite a decrease i...

Why total product continues to increase despite a decrease in the marginal product?

Government, A government official announces a new policy. The country wishe...

A government official announces a new policy. The country wishes to eliminate its trade deficit, but will strongly encourage financial investment from foreign firms. Explain why su

Determinants of private demand - regional disparity, Determinants of Privat...

Determinants of Private Demand - Regional Disparity There is imbalance in distribution of facilities. There are over 600000 villages in India. And there were over 8737 degree

Mediterranean regional project (mrp) technique, Mediterranean Regional Proj...

Mediterranean Regional Project (MRP) Technique This technique had been initially employed by the OECD (Organisation of Economic Cooperation and Development, Europe) to prepare

Cost function for savings and loan industry, Cost Function for Savings and ...

Cost Function for Savings and Loan Industry * The empirical estimation of long run cost function can be useful in restructuring of the savings and loan industry in wake of savi

PPC, How dose PPC help, illustrate the basic economic problem?

How dose PPC help, illustrate the basic economic problem?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd