The Econotrip travel agency sells weekend packages to Las Vegas. Its monthly demand is P=1280-Q and...

 

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The Econotrip travel agency sells weekend packages to Las Vegas. Its monthly demand is P=1280-Q and its MR = 1280-2Q. It has TC=3Q² with MC = 6Q and ATC=3Q (ATC is linear in this example). Complete parts a through d below. a) What is the firm's monthly profit-maximizing number of travel packages, price, and profit? The firm's monthly profit-maximizing number of travel packages is, its profit-maximizing price is $, and its maximum profit is $ b) Suppose new travel agents open up for business. Econotrip sees its demand fall to P = 760-Q and its MR = 760-2Q. What is Econotrip's new profit-maximizing number of travel packages, price, and profit? Econotrip's monthly profit-maximizing number of travel packages is, its profit-maximizing price is $, and its maximum profit is $ CONC 1400 1300- 1200- 1100- 1000- 900- 800- 700- 600- 500- 400- 300- 200- 100- 0- P 0 MC/ 200 400 ATC MR₁ 600 800 1000 D₁ 1200 Q 1400 c) Sketch Econotrip's profit-maximizing outcome both before and after new travel agents entered the industry. 1.) Use the rectangle drawing tool to show Econotrip's profit in its profit-maximizing outcome before new travel agents entered the industry. Label this region 'Original Profit.' 2.) Use the rectangle drawing tool to show Econotrip's profit in its profit-maximizing outcome after new travel agents entered the industry. Label this region 'New Profit.' Carefully follow the instructions above, and only draw the required objects. d) What could Econotrip do to get its demand back up to where it was? The Econotrip travel agency sells weekend packages to Las Vegas. Its monthly demand is P=1280-Q and its MR = 1280-2Q. It has TC=3Q² with MC = 6Q and ATC=3Q (ATC is linear in this example). Complete parts a through d below. a) What is the firm's monthly profit-maximizing number of travel packages, price, and profit? The firm's monthly profit-maximizing number of travel packages is, its profit-maximizing price is $, and its maximum profit is $ b) Suppose new travel agents open up for business. Econotrip sees its demand fall to P = 760-Q and its MR = 760-2Q. What is Econotrip's new profit-maximizing number of travel packages, price, and profit? Econotrip's monthly profit-maximizing number of travel packages is, its profit-maximizing price is $, and its maximum profit is $ CONC 1400 1300- 1200- 1100- 1000- 900- 800- 700- 600- 500- 400- 300- 200- 100- 0- P 0 MC/ 200 400 ATC MR₁ 600 800 1000 D₁ 1200 Q 1400 c) Sketch Econotrip's profit-maximizing outcome both before and after new travel agents entered the industry. 1.) Use the rectangle drawing tool to show Econotrip's profit in its profit-maximizing outcome before new travel agents entered the industry. Label this region 'Original Profit.' 2.) Use the rectangle drawing tool to show Econotrip's profit in its profit-maximizing outcome after new travel agents entered the industry. Label this region 'New Profit.' Carefully follow the instructions above, and only draw the required objects. d) What could Econotrip do to get its demand back up to where it was?

Answer rating: 100% (QA)

a Original demand and MR functions P 1280 Q MR 1280 2Q Equating MR MC and s... View the full answer