Question

Currently, Action Movers is the only licensed short-haul chemical carrier between Baton Rouge and Houston. The market demand for chemical freight along the route is given below. Q = 1,472 - 4P where P is price per ton of processed chemicals and Q is total tons hauled per week. To make things simple, also assume that Action has no fixed costs. From company records, you are given the following variable costs: TVCA = 20QA Calculate the monopoly outcome for action under these conditions. That is what price will Action Charge, how many tons will it haul, and what profits will it earn.

Answer 1