1.During spring break, students have an elasticity of demand for a trip to Cancun of −5. How much should an airline char

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1.During spring break, students have an elasticity of demand for
a trip to Cancun of −5. How much
should an airline charge student for a ticket if the price it
charges the general public is $400?
Assume the general public has an elasticity of −2.
a. $260
b. $210
c. $280
d. $250
2.Which of the following is true under monopolistic competition
in the short run?
a. P=MC
b. P=MR
c. P>ATC
d. None of the above
3.You are the manager of a monopoly that faces a demand P = 90 −
5Q. Your costs are TC = 20 + 10Q.
How much output would you produce if you were maximizing profits?
How much would you
produce if maximizing revenues?
a. Q for maximizing profits = 8; Q for max revenues =9
b. Q for maximizing profits = 8; Q for max revenues =10
c. Q for maximizing profits = 9; Q for max revenues = 8
d. Q for maximizing profits = 8; Q for max revenues = 8
e. None of the above