Finding equilibrium fare, The marginal and average cost

Finding equilibrium fare

Reference no: EM1367370

The marginal and average cost curves of taxis in metropolis are constant at $.20/mile. The demand curve for taxi trips in metropolis is given by P = 1 - .00001q, where P is the fare, in dollars per mile, and Q is measured in miles per year. The industry is perfectly competitive and each cab can provide exactly 10,000 miles/yr of service. I am having trouble graphically or mathmatically finding the equilibrium fare and equilibrium number of cabs.

Reference no: EM1367370

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