Question

Major Tom's Space Flights offers commercial space flights to people willing to pay for a seat on his rocket ship. Major Tom currently has a monopoly on commercial space travel. The demand for seats on his rocket ship and the cost information are shown in the table and graph below. Major Tom's Market for Space Travel Price (millions of Quantity Demanded dollars) (Beats) $34 Marginal Revenue (millions of dollars) Marginal Cost (milions of dollars Jo $5.60 6.00 6.40 $32.00 28.00 24.00 20.00 16.00 12.00 8.00 4.00 0.00 4.00 -8.00 -12.00 7.20 7.60 8.00 9.40 8.80 9.60 10.00

Answer 1

Profit is max when MR=MC This aty = 7 seats 4 Pluie = $20 million for allocative efficiency, PMC. This efficient level of output is 12 seats & Perie – slomillion Consumer suples will increas by ROX (2010)x7+ tx 5x10 = tota5 =95 million . c) MR 12 DW2= 1x120-8)×(12-7) = I x 12x = 30 0 0