Hot Air Balloon Rides is a single-price monopoly. Columns 1 and 2 of the table set out the market demand schedule and columns 2 and 3 set out the total cost schedule. Now suppose that the government places a fixed tax on Hot Air's profit of $40 a month. Calculate Hot Air's new profit-maximizing output and price. When Hot Air is producing its new profit-maximizing output, the number of rides it produces is a month and the profit-maximizing price of a ride is $0. >>> Answer to 1 decimal place. Price (dollars per ride) 150 140 130 120 110 100 Quantity (rides per month) 0 1 2 3 4 5 Total cost (dollars per month) 50 175 310 455 610 775
Hot Air Balloon Rides is a single-price monopoly. Columns 1 and 2 of the table set out the market demand schedule and columns 2 and 3 set out the total cost schedule. Now suppose that the government places a fixed tax on Hot Air's profit of $40 a month. Calculate Hot Air's new profit-maximizing output and price. When Hot Air is producing its new profit-maximizing output, the number of rides it produces is a month and the profit-maximizing price of a ride is $0. >>> Answer to 1 decimal place. Price (dollars per ride) 150 140 130 120 110 100 Quantity (rides per month) 0 1 2 3 4 5 Total cost (dollars per month) 50 175 310 455 610 775
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.3P
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