Answer to Question #51835 in Economics of Enterprise for Lawrence
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.
Need a fast expert's response?Submit order
and get a quick answer at the best price
for any assignment or question with DETAILED EXPLANATIONS!
please use panel for submitting new questions
if we assume that a given bus market is in perfect competition which charges a flat fare of $1, and if the formula for the total demand in the market is given by the equation Qd=250-60P
Where Qd is the quantity demanded in thousands at a given price P
a) if the cost per vehicle kilometre is N$ 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?