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

Determine the change in unemployment - okun''s law, 1. Utilize Okun's law ...

1. Utilize Okun's law to answer the questions below; u t  - u t-1  = -0.4(g yt  - 3%) Assuming u t-1  = 7% a. Calculate the change in u (u t  - u t-1 ) for each of the follo

Demand of pepsi cola goes up, If the quantity demanded of Pepsi Cola goes u...

If the quantity demanded of Pepsi Cola goes up, and its supply enhances what will occur in the market for Pepsi?

Explain about real wages, Q. Explain about Real Wages? Real Wages:Value...

Q. Explain about Real Wages? Real Wages:Value of wages, adjusted for level of consumer prices. If nominal value of wages is growing faster than consumer prices, then real wages

Consumer behavior, what are the properties of marshallian demand function

what are the properties of marshallian demand function

What is black economy, Defining black economy, If you pay your cleaner or ...

Defining black economy, If you pay your cleaner or builder in cash or for some reason neglect to tell the taxman which you were paid for a service rendered, you participate in the

Monopoly, What are the causes of emergence of monopoly?

What are the causes of emergence of monopoly?

Visit to village panchayat for agricultural based project., related documen...

related documents, photos,paper for permission from court etc.

Durability of the commodity, Durability of the Commodity: With some comm...

Durability of the Commodity: With some commodities, we require one at a time and they are used for a very long time before they get spoilt. Examples of such goods are cars, tele

What is the difference between price value and price level, What is the dif...

What is the difference between price value and price level?  Price value is the value of commodity bought by the consumer at a certain price from the market, while, price level

The hypothesis of rational expectations, The Hypothesis of Rational Expecta...

The Hypothesis of Rational Expectations : In the General Theory (Keynes, 1936) we noted that the state of expectations was taken as given. There was, in addition, explici

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