Need help with #35 please. I\'m keep gettig a wrong answer 31-35. A single firm
ID: 1122482 • Letter: N
Question
Need help with #35 please. I'm keep gettig a wrong answer
31-35. A single firm owns the only subway system in a large city. The firm has total costs in the short run given where q is the number of riders per minute using the subway and TC is the total cost per minute in dollars. The demand for subway rides is given by: P 3.4 0.035q where q is the number of riders per minute using the subway and P is the price charged to each consumer in dollars. Questions 31 through 35 concern this subway system. 31. To maximize profit, what price will the firm charge? A) S0 F) $2 B) $1.00 G) $2.35 C) $1.30 H) S2.50 D) $1.50 D $2.80 E) $1.80 ) $3.40 32. Continuing question 31, if the firm maximizes profits, what will be the value of profits per minute? A) SO F) $3.40 B) $1.00 G) $4.35 C) $1.25 H) $2.50 D) $1.50 D $2.80 E) $2.8 ) $4.00 Page 10 of 12 33. If the government decides to regulate the subway and requires the firm to charge a price that reduces economic profits to zero, what price will be charged? A) S0 F) S2 B) $1.00 G) $2.35 C) $1.30 H) $2.50 D $1.50 E) I $2.80 $3.40 34. When the government regulates the subway as described in Question 33, what is the change in the total gain to society (per minute) in moving from a profit-maximizing monopoly to a regulated monopoly? A) S0 F) S11.00 G) $12.00 H) S12.25 I S13.75 $14.00 B) $4.00 C) $8.00 D) $8.25 E) $9.00 35. Now the government decides to take over the subway and operate it at a loss by charging price equal to marginal cost. What price will be charged (to the nearest penny)? A) S0 F) S1.50 B) $1.00 G) $1.53 C) $1.30 H) $1.60 D) $1.33 D S1.80 E) $1.44 ) $2.00Explanation / Answer
35) we have , P=3.4-0.035Q
and MC = 0.01Q + 1
so now government own subway and charge a price where MC =P
so ,
3.4 -0.035Q=0.01Q + 1
3.4-1 = 0.01Q +0.035Q
2.4 = .045Q
Q = 53.33
P = 3.4 - 0.035*53.33
P =3.4 -1.87
P = 1.53
so, the answer is G -) $1.53