Ask Question, Ask an Expert


Ask Microeconomics Expert

Formerly, the market for air travel within Europe was highly regulated. Entry of new airlines was severely restricted, and Air fares were set by regulation. Partly as a result, European Air fares were higher than U.S fare for routes of comparable distance. Suppose that, for given European air route (say, London to Rome), annual air travel demand is estimated to be Q = 1,500 - 3P ( or, equivalently, P = 500 - Q/3), where q is the number of trips in thousands and P is the one way fare in dollars. (for ex, 600 thousands annual trips are taken when the fare is 300.) In addition, the long run average ( one way ) cost per passenger along this route is estimated to be $200.

a. some economists have suggested that during the 1980s and 1990s there was an implicit cartel among European air carriers whereby the airlines charged monopoly fares under the shield of regulation. Given the preceding facts, find the profit maximizing fare and the annual number of passenger trips.

b. in the last 10 years, deregulation has been the norm in the European market, and this has spurred new entry and competition from discount air carriers such as ryan air and easyjet. Find the price and quantity for the euoropean air route if perfect competition becomes the norm.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M945381

Have any Question? 

Related Questions in Microeconomics

Write a paper 2 - 4 pages based upon the following

Write a paper (2 - 4 pages) based upon the following activity: During an evening of television viewing, write down all of the advertisements you see (minimally use 10). 1. Which ones did you like? Which ones did you disl ...

Questions -q1 consider the market for a course of

Questions - Q1. Consider the market for a course of antibiotics. Suppose the supply of antibiotics follows P = 5 + 2Q S and the demand follows P = 20 - 20 D . Here, Q represents antibiotics, denominated in millions of un ...

Technological advancement for firms- econin consideration

Technological Advancement for Firms- ECON In consideration of the arguments made by Chandler, Enduring Logic of Industrial Success, answer this question: • What role will technological advancement play in the future evol ...

Assignmentwrite an assessment in which you address the

Assignment Write an assessment in which you address the following problems/questions: 1. Evaluate the leverage implications of debt financing choices. You should include in your discussion the decomposition of ROE model. ...

Assignmentbenefiting administration is a strong part of the

Assignment Benefiting administration is a strong part of the employee value propositions. Compare three organizations and how these organizations have demonstrated best practices in offering employee benefits. Additional ...

Answer all of the following questions in microsoft word

Answer all of the following questions in Microsoft Word file with complete questions and answers and attach it. 1. Consider the markets for e-books, e-readers (e.g. kindle), and physical copies of books. For each of the ...

Clarkson v orkin exterminating co incwrite a brief in the

Clarkson v. Orkin Exterminating Co., Inc. Write a brief in the prescribed format. Fact,Issue,Holding,rationale Case Questions 1. Why did the trial court grant the plaintiff's summary judgment motion and order reformation ...

Milestone guidelinesthe purpose of this milestone is for

Milestone Guidelines The purpose of this milestone is for students to explore the various costs their firm faces and to describe their firm's market. Using the concepts and tools developed in Modules Four and Five, stude ...

Table 10-3debt ratings median financial ratios by

TABLE 10-3 Debt Ratings: Median Financial. Ratios by Category   Median ratios for overall category in January 2011 (excludes financial firms) Earnings before S&P interest and   Cash flow from   debt taxes to net Pretax i ...

Read the case target from expect more to pay less on pages

Read the case "Target: From 'Expect More' to 'Pay Less'" on pages 103 to 105 of the textbook and prepare answers to the questions below. Question 1 Identify four actors in the microenvironment that haveaffected Target's ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate