Question: Can you please help me solve the final step on this home work question? Suppose that airlines compete for customers on flights between Chicago and

Can you please help me solve the final step on this home work question?

Can you please help me solve the final step on this home

Suppose that airlines compete for customers on flights between Chicago and Los Angeles. The total number of passengers flown by the firms, Q, is the sum of the number of passengers flown by each firm. We assume all firms are identical and face the same costs. Our estimate of the market demand function is Q = 405 - P, where price, p, is the dollar cost of a one-way flight, and total quantity of the airlines combined, Q, is measured in thousands of passengers flying one way per quarter. Each airline has a constant marginal cost, MC, of $117 per passenger per flight. What fixed cost would result in four firms operating in the monopolistically competitive equilibrium? What are the equilibrium quantities and prices? The Cournot equilibrium quantity for each of the four firms is q= 57.60 thousand passengers per quarter. (Enter your response rounded to two decimal places.) The Cournot equilibrium price is p = $ 174.60 per passenger. (Enter your response rounded to two decimal places.) There would be four firms operating in the monopolistically competitive market if the fixed cost for each firm (F) was F = $ million per quarter

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!