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The Lone Star Transportation Company hauls coal and manufactured goods The Lone Star Transportation Company hauls coal and manufactured goods The demand curve for its services by the coal producers

The Lone Star Transportation Company hauls coal and manufactured goods


The Lone Star Transportation Company hauls coal and manufactured goods. The demand curve for its services by the coal producers is

PC = 495 – 5QC

where PC is the price (in dollars) per ton- mile of coal hauled and QC is the number of ton miles of coal hauled (in thousands). The demand curve for its services by the producers of manufactured goods is

PM = 750 – 10QM

where PM is the price (in dollars) per ton- mile of manufactured goods hauled, and QM is the number of ton-miles of manufactured goods hauled (in thousands). The firm’s total cost function is

TC = 410 + 8(QC + QM)

where TC is total cost (in thousands of dollars).

a. What price should managers charge to haul coal?

b. What price should managers charge to haul manufactured goods?

c. If a regulatory agency were to require managers to charge the same price to haul both coal and manufactured goods, would this reduce the firm’s profit? If so, by how much?

The Lone Star Transportation Company hauls coal and manufactured goods

 

May 22 2020 Read more Less More

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