ECON 100.2 - Albatross Airlines has a monopoly on air travel

Question # 00542855 Posted By: dr.tony Updated on: 06/09/2017 02:08 AM Due on: 06/09/2017
Subject Economics Topic Microeconomics Tutorials:
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Albatross Airlines has a monopoly on air travel between Peoria and Dubuque. If Albatross

makes one trip in each direction per day, the demand schedule for round trips is q =

160?2p, where q is the number of passengers per day. (Assume that nobody makes one-way

trips.) There is an “overhead” fixed cost of $100,000 per day that is necessary to fly the

airplane regardless of the number of passengers. In addition, there is a marginal cost of

$8000 per passenger. Thus, total daily costs are 100,000+8000q if the plane flies at all.

a. Graph and label the marginal revenue curve, and

the average and marginal cost curves.

b. Calculate the profit-maximizing price and quantity and total daily

profits for Albatross. P = ?; q = ?; ? = ?


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  1. Tutorial # 00540021 Posted By: dr.tony Posted on: 06/09/2017 02:09 AM
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