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Micro doubt

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Homer Simpson

Jun 07, 2014; 7:45am

Micro doubt

551 posts

how to solve this?

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Anjali

Jun 07, 2014; 8:50am

Re: Micro doubt

837 posts

20, 000 ?

"Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth."

Homer Simpson

Jun 07, 2014; 8:52am

Re: Micro doubt

551 posts

answer is 9900. what was your approach?

“Operator! Give me the number for 911!”

Anjali

Jun 07, 2014; 9:03am

Re: Micro doubt

837 posts

Wait I wil try again

"Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth."

phelps.phan

Jun 07, 2014; 11:38am

Re: Micro doubt

105 posts

In reply to this post by Homer Simpson

Before increasing the number of seats, price=20 so revenue=20*100,000=2,000,000.
After qty increased by 1000, you'll get the price as 19.9 for qty 101,000. Revenue =19.9*101,000=2,009,900.
Increase in Revenue =9900

Homer Simpson

Jun 07, 2014; 12:09pm

Re: Micro doubt

551 posts

Thanks, got it now!

“Operator! Give me the number for 911!”

Ankur9

Jun 07, 2014; 1:19pm

Re: Micro doubt

16 posts

In reply to this post by Homer Simpson

At q = 100000, the price of 1 ticket would be p=20 from the given demand function.

When q = 101000, the price of 1 ticket would be p=19.9.

Since this would be a case of monopoly these new 1000 units would come under inframarginal units. The new price would be applicable for all previous units as well.

Increase in revenue due to extra seats = 19.9 * 1000 = 19900
Decrease in revenue due to decrease in price = (20-19.9)*100000 = 10000
Net increase in revenue = 19900-10000 = 9900