NYC is describe… Show more Suppose you own a taxi company

NYC is describe… Show more Suppose you own a taxi company in New York City. Assume further the taxi industry in NYC is described by a perfectly competitive market structure (ie. the firm is a price taker). Further, the cost structure your firm faces is described by the following equation: TC = 40 + 6Q + Q2 Where Q = the number of taxi trips. The market price you face P = $36/trip. Note in this problem the taxi company takes the Price, P, as given information. They can sell all the trips they want to at P = $30. Thus, for each additional trip the change in revenues is $36 or the price. That is P = MR. Remember TR = P*Q and Profit = %u03C0 = TR %u2013 TC. Note that the profit maximizing rule is find the Q at which MR = MC where MR = dTR/dQ and MC = dTC/dQ. a. What is the profit maximizing or loss minimizing number of trips, Q? Hint the profit maximizing output is where MR = MC. b. What is the Economic profit or loss you are making (%u03C0 = TR %u2013 TC)? c. What output level is the minimum point for Average Total Costs (ATC)? d. What output level, Q, and price/trip, P, will economic profits be zero? Note Economic Profits are zero [ie. (Econ %u03C0 = 0)] when P = ATC. Be sure to include a graph and equation work. • Show less

                                                                                                                                  Order Now

Place Order