Perfect Flights, a commercial airline, has a monopoly on the
route it flies. It decides to charge each passenger a price exactly
equal to what the passenger is willing to pay. Use the graph above
to calculate the profit for Perfect Flights.
Homework Answers
Since the profit maximizing condition of the perfectly competitive firm is
P=MC
Since Perfect Flights, a commercial airline, has a monopoly on the route it flies. It decides to charge each passenger a price exactly equal to what the passenger is willing to pay.
Hence profit maximizing condition of the perfectly competitive firm is
P=MC
Hence price will be=100
Q=200
Profit=(P-MC)Q
=(100-100)*200
=$0
This is because P and MC are equal because there is no fixed cost.
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