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- Is the demand for public transit more responsive to price changes or service quality changes? Discuss the implication to transportation policies.Explain rate of return regulation and price cap regulation. What are the major implications of these models for public utilities?A company is considering building a bridge across a river. The bridge would cost $2 million to build and nothing to maintain. The following table shows the company's anticipated demand over the lifetime of the bridge: Price per crossing ($) Number of crossing, in thousands 8 0 7 100 6 200 5 300 4 400 3 500 2 600 700 0 800 a. If the company were to build the bridge, what would be its profit-maximizing price? Would that be the efficient level of output? Why or why not? b. If the company is interested in maximizing profit, should it build the bridge? What would be its profit or loss? c. If the government were to build the bridge, what price should it charge? d. Should the government build the bridge? Explain.
- What public policy approach would be most reasonable to protect consumers from harmful products? How might market and economic forces play a role in protecting consumers?Are there opportunities to combine volumes of spending from different busi- nesses, and standardize product requirements, reduce the number of suppliers providing these products, or exploit market conditions to receive better pricing?Any charge that is not airfare is referred to as ancillary revenue for airlines—and they are cleaning up on it to the tune of $20 billion a year. While consumers can avoid some fees, such as those for food, preferred seating, and wi-fi, the majority can’t avoid baggage fees. What type of pricing strategies are airlines using? Is it ethical for airlines to charge baggage fees?
- (a) Explain verbally and digramatically why Christmas trees are cheaply sold on Christmas Eve (compared to their intial price) by considering both demand and supply. (b) Assuming zero disposal costs, why is the correct profit maximising price to charge for the unsold trees on Christmas Eve the one at which the elasticity of demand is equal to -1? Illustrate using a diagram. Would the price be lower still if there were some disposal costs that the seller would face to dispose of the unsold trees?A profit-maximizing restaurant in a town has a constant marginal cost of $10 per lunch customer and can sell to two types of customers: retirees and non-retirees. The shop faces a demand by retirees given by Qr - 100-4P and a demand by non-retirees given by QN" 110-3P. a. Which price would retirees pay under uniform pricing? b. Which price would retirees pay if the seller could successfully engage in price discrimination? Show and explain the economic reasoning behind the steps in vour answereHow market equilibrium is found with Pollution Abatement Subsidy? Also draw graph and interpret it.
- Why do governments (city, state or national) often provide funding for creating and maintain public parks? What incentives may cause businesses to contribute to park funding?Consider a town in which only two residents, Hubert and Kate, own wells that produce water safe for drinking. Hubert and Kate can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water. Price Quantity Demanded Total Revenue (Dollars per gallon) (Gallons of water) (Dollars) 6.00 0 0 5.50 45 $247.50 5.00 90 $450.00 4.50 135 $607.50 4.00 180 $720.00 3.50 225 $787.50 3.00 270 $810.00 2.50 315 $787.50 2.00 360 $720.00 1.50 405 $607.50 1.00 450 $450.00 0.50 495 $247.50 0 540 0 Suppose Hubert and Kate form a cartel and behave as a monopolist. The profit-maximizing price is____per gallon, and the total output is_____gallons. As part of their cartel agreement, Hubert and Kate agree to split production equally. Therefore, Hubert's profit is _____, and Kate's profit is______. Suppose that Hubert and Kate have been successfully…Demand curve of electric vehicles versus gas vehicles
