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Air Express, an overnight mail carrier, provides one flight per day from Portland, Maine to Hawaii. Currently Air Express flights have been operating at 80% capacity (maximum capacity 400 pounds). Therefore each flight has the potential to carry 80 additional pounds of mail. Air Express is currently accepting bids to carry 80 pounds of mail to be delivered to Hawaii. You have been retained by Express to provide them with the lowest bid price they should accept for the 80 pounds of unused capacity without reducing their current level of profits?
Your analysis, to date, has shown the following:
P = 82 - .25q (demand equation) where P is the price Express charges to delivery a pound of mail and q represents a pound of mail.
TC = .00025q2 +q + 700
MC = .0005q + 1
MR = 680 - .5q

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Solution Summary

Determine lowest bid price they should accept in the scenario.

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The revenue of the mail delivery is
TR = P*q = (82 - .25q)* q = 82 q - .25q2
Thus, the marginal revenue is dTC / dq = 82 - ...

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