What is the maximum amount the railroads can charge for

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Reference no: EM133261004

Case: Suppose there is a railroad from A to B. Only one train per day runs from A to B and back, and all passenger trips are round trips. The cost of operating the train for each daily round trip is C = 100 + 20x. Each carriage holds 100 passengers. The average benefit function to the railroads is B(x) = 40 - 0.01x where x is the number of passenger trips taken. (Note: Average benefit is the benefit per unit of x, or simply B(x)/x).

Question 1: What will be the optimum number of trips taken, and the average benefit per trip, to the railroads?

Question 2: What is the maximum amount the railroads can charge for the total number of passenger trips taken daily? What will be the per passenger charge?

Reference no: EM133261004

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