Question #51835

if we assume that a given bus market is in perfect competition which charges a flat fare of $1 and if the formula for the total demand in the market is given by qd=250-60p where qd is the quantity demand at a given price. if we further assume constant returns to scale. what is the total market demand at the $1 flat fare?

Expert's answer

P = N$1, Qd = 250-60P

The total demand at the N$1 flat fare is: Qd = 250 - 60*1 = 190 thousands.

If the market is shared equally by 4 firms, the number of passengers per vehicle carried by each company is Q = 190/4 = 47.5 thousands.

The total demand at the N$1 flat fare is: Qd = 250 - 60*1 = 190 thousands.

If the market is shared equally by 4 firms, the number of passengers per vehicle carried by each company is Q = 190/4 = 47.5 thousands.

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Assignment Expert13.04.15, 16:28Dear visitor,

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Fredrick12.04.15, 17:49if we assume that a given bus market is in perfect competition which charges a flat fare of $1, and if the formula for the total demand in the market is given by the equation Qd=250-60P

Where Qd is the quantity demanded in thousands at a given price P

a) if the cost per vehicle kilometre is N$ 1.60, avarage utilisation 20 passengers per vehicle kilometre and avarage trip distance 10 kilometres:

1. what is the level of bus kilometre required to service this market?

2. what profit are being made?

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