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Answer to Question #51835 in Economics of Enterprise for Lawrence

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.

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Assignment Expert
13.04.15, 16:28

Dear visitor, 
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Fredrick
12.04.15, 17:49

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?

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