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    Calculating profit maximizing price

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    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?

    © BrainMass Inc. brainmass.com October 10, 2019, 3:03 am ad1c9bdddf
    https://brainmass.com/economics/monopolies/405510

    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.

    $2.19