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as the exclusive carrier on a local airline route, a regional airline must determine the number of flights it will provide and the fare it will charge. Taking into account operating and fuel costs, airport changes, and so on, the estimated cost per flight is $2,000.00. It expects to fly full flights (100 passengers), and its marginal cost on a per passenger basis is $20.00. Finally, the airline's estimated demand curve is P=120 - (0.1*Q), where P is the fare in dollars, Q is the number of passengers per week.
a) what is the airline's profit maximizing fare? How many passengers does it carry per week using how many flights? What is its weekly profit?
b) suppose the airline is offered $4,000.00 per week to haul freight along the route for a local firm. This will mean replacing one of the weekly passenger flights with a freight flight (at the same operating cost). Should the airline carry freight for the local firm? Explain.
consider a representative consumer with preferences over consumption and leisure given by U(C,L)=C^2/3 L^1/3 assume that she has a total of h=18 hours a day which she can use for leisure or trade in the market for a wage rate w.
If Beth's greedy father imposes a charge of $2 per acre for use of the family mower, how will this affect Beth's marginal cost function How will it affect her profit-maximizing decision What will her profits be now How much will Beth's greedy fath..
a broadcasting executive is reviewing the prospects for a new television series,according to her judement , the probability is 0.25 that the show will achieve a rating higher than 17.8, and the probability is 0.15
A printer's wage rate is $20, and the price of a printing press is $5,000. The last printer added 20 books to total output, while the last press added 1,000 books to total output. Is the publishing house making the optimal input choice.
A small pipeline will cost less to purchase (including valves and other appurtenances) but will have a high head loss and, therefore, a higher pumping cost.
The incumbent does know its unit cost. Market demand is common knowledge to both firms. The entrant, however, does get to observe the current or pre-entry market price at which the incumbent sells its good.
Suppose you currently run one shift at your plant. You have $1,000 per day in administrative overhead and the daily wages and materials cost of operating the shift are $30,000. If you expand to two shifts, your average cost per-shift.
Consider an individual with preferences over consumption c and leisure l given by: u(c,l) = [(c^(1-γ ))/(1-γ)] + al where γ > 0 and a > 0 are constants. She is endowed with h hours of time to divide between working at wage w and leisure. She has no..
How much can Wells Fargo lend to developer who will repay the loan by selling first 6 view lots out of 13 lots at $190,000 each 2 year from now? Assume the bank will lend at a nominal 14% per year, compounded semiannually.
Create an inverse demand of P = a - bQ, inverse demand of P = 11 - 2Q. a) Calculate the marginal revenue (MR). b) Find the quantity and price which maximize profits when marginal cost is zero (round off to two decimal places for any number that is ..
an investment cost of $50,000; maintenance costs that start at $5,000 at the end-of-year (EOY) one and increase by $1,000 for each of the next four years, and then remain constant for the following five years; savings of $20,000 per year (EOY 1-10..
If the Central Bank in uenced the nominal rate in such a way as to make the Quantity Theory of Money hold true (to your answer in the previous section), then what level of i (as a percentage) would they target
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