Find the demand function for each firm

Reference no: EM13182112

Suppose there are two airlines, each one runs one flight a day to Chicago. Delta runs one at 8AM and United runs one at 6PM. There are 100 people whose preferences are evenly distributed between 8AM and 6PM. Each consumer values the flight at $300, but dislikes leaving at a different time then their preferred time by $0.5 per minute. The marginal cost to add a consumer is $20. To make things easier, normalize 8AM to location 0 and 6PM at location 600 (600 minutes from 8AM). Assume that all consumers will want to buy a plane ticket.

(a) Find the demand function for each firm.
(b) Write down the profit function for each firm.
(c) Find the best response function for each firm.
(d) Find equilibrium prices, number of passengers, and profits for each firm.

Reference no: EM13182112

Questions Cloud

Strength of ethnic identity and self-esteem : What is the best description of the relationship between strength of ethnic identity and self-esteem? A major theme of most date rape prevention workshops

Determine the average annual growth rate : Real GDP in the U.S. increased by a% in 2008 and increased by b% in 2009, and increased by d% in 2010. In class, we learned that the average annual growth rate of real GDP for the period 2008-2010 can be (1) approximated as: (a% +b% +d%)/3

Frequency of measurement per process : What are your views on determining the duration of carrying out performance measures and data collection to run performance measures?

Populares and the optimates : Consider the struggle between the populares and the optimates. Who were the Gracchi, and how did they fit into this debate and touch off a class-driven conflict that lasted until Caesar dissolved the Republic?

Find the demand function for each firm : Suppose there are two airlines, each one runs one flight a day to Chicago. Delta runs one at 8AM and United runs one at 6PM. There are 100 people whose preferences are evenly distributed between 8AM and 6PM. Each consumer values the flight at $300..

What is your opinion about eating toasted ants : What is your opinion about eating toasted ants, about eating fried frog legs, about eating puppies and kittens? About eating raw monkey brains?

Find the best response function for each firm : Spookmart and Scaretown are the only two halloween costume stores in town. Both the stores are wondering how many Miley Cyrus twerking costumes to order. Each costume costs $2 from the supplier (i.e., marginal cost for the stores is $2) and market..

What is the optimal pure bundling price : Microsoft sells three different programs in their office suite: Word, Excel and PowerPoint. Each has a marginal cost of $15. There are three types of con- sumers, writers, accountants and professor, who have the following values for the three diff..

Nonworking poor and quality of life in old age : The author of Aging and the Life Course mentions that Public Assistance is rooted in the 16th Century British system of "the nonworking poor should not be treated better than the lowest- wage earners." Do you think we are still operating under the sa..

User Account

All Pages