Pricing strategies-equilibrium price

Assignment Help Microeconomics

Reference no: EM1366671

In 2000, the town of Brother's Bay in Door County Wisconsin had a more-or-less free market in boat services. Any adult citizen could provide boat services as long as the drivers and the boats satisfy certain safety standards. Suppose that the marginal cost per trip of a boat ride is constant, where MC = $5, and that each boat has a capacity of 20 trips per day.

If the demand function for boat rides was Qd = 1200 - 20P, where demand is measured in rides per day. Assume that the industry is perfectly competitive.

A. What is the competitive equilibrium price per ride?

B. What is the equilibrium number of rides per day? How many boats will there be in equilibrium?

C. In this competitive market, what is the aggregate profit?

D. In 2005, the town board of Brother's Bay created a boat licensing board and issued a license to each of the existing boats. The board stated that it would continue to adjust the boat fares so that the demand for rides equals the supply of rides, but no new licenses will be issued in the future. In effect, all profit would be turned over to the township for licenses. How many licenses would be sold?

E. In 2010, costs had not changed, but the demand curve for boat rides had become Qd = 1220 - 20P. What was the equilibrium price of a ride in 2010?

Reference no: EM1366671

Questions Cloud

What kind of demand does walmart''s products have : hat kind of demand does walmart's products have? Does it vary by season? What market segment does Walmart target?

Explanation to change management question : Explanation to Change management question - Analyze the different reaction stages related to change.

Determining required rate of return : Tom Phillips has just invested $8,760 for his son (age one). This money will be used for his son's education seventeen years from now. He computes that he will require $60,000 through the time the boy goes to school.

Designing a health and wellness program : Suppose that you were hired by the city of Phoenix, AZ to design a health and wellness program for baby boomers.

Pricing strategies-equilibrium price : What is the competitive equilibrium price per ride and what is the equilibrium number of rides per day? How many boats will there be in equilibrium? In this competitive market, what is the aggregate profit?

Write analogous steps in dimensioning computer network : Write four steps which you think a transportation engineer takes when dimensioning such highway. What are the analogous steps in dimensioning computer network?

Polarities and polarity management : Show you understand polarities and polarity management - Polarities and polarity management

What is strategic management : What do you mean by strategic management? What are some illustrations of business strategies in nursing or health care settings?

Determine the purpose of your presentation : Research information on this topic - Determine the purpose of your presentation and your audience.

User Account

All Pages