# Calculating profit maximizing price

Monopoly Rinks is the only ice skating facility in Mapleville. The next closest rink is about 100 miles away. It has determined that its demand curve is

Q = 123 - 0.5P - 0.25 Pc + .01 Y

where Q is the quantity of seasonal passes sold, P is the price for seasonal pass, Pc is the average price for concession items, and Y is average per capital income in Mapleville.

The local economists estimated that Y is equal to $12,000 and Monopoly has set Pc at $10. If Monopoly's MC of serving another customer is equal to $1, what is the profit maximizing price for seasonal passes?

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#### Solution Preview

Given that

Q=123-0.5P-0.25 Pc+.01 Y

Put Pc=$10

Y=12000

Q =123-0.5P-0.25*10+.01*12000

Q=240.5-0.5P

On ...

#### Solution Summary

Solution describes the steps to calculate profit maximizing price in the given case.