Albatross Airlines has a monopoly on air travel between Peoria and Dubuque. If Albatross
makes one trip in each direction per day, the demand schedule for round trips is q =
160−2p, where q is the number of passengers per day. (Assume that nobody makes one-way
trips.) There is an “overhead” fixed cost of $100,000 per day that is necessary to fly the
airplane regardless of the number of passengers. In addition, there is a marginal cost of
$8000 per passenger. Thus, total daily costs are 100,000+8000q if the plane flies at all.
a. Graph and label the marginal revenue curve, and
the average and marginal cost curves.
b. Calculate the profit-maximizing price and quantity and total daily
profits for Albatross. P = ?; q = ?; π = ?
PLEASE SHOW SOLUTION. THANK YOU.