A monopoly bus company has two bus routes in Pennsylvania. The inverse demand function for route 1 is p=30-q/2, where q is measured in hundreds of bus rides per week. The inverse demand function for route 2 is p=10-q. The marginal cost of service is zero, but each route costs C per week to operate. Note that C is the same for both routes. The company may charge different prices on these routes. For each route, it may operate or shut down.

a. If the company operates route 1, the profit-maximizing quantity is _______ and the price is ______.

b. If the company operates route 2, the profit-maximizing quantity is _______ and the price is ______.

c. For what values of C will the bus company provide service for both routes, for just one route, and for neither route?

d. Suppose C=$1000 and demand for route 2 falls to p=6-q. What is the profit-maximizing quantity for route 2 now?

Answer rating: 100% (QA)

a P 1 30 q 1 2 1 p 1 q 1 c 1 30q 1 2q 1 c differential wrt q 1 d 1 dq 1 ... View the full answer