4. A company is considering building a bridge across a river. The bridge would cost $2 million to build and nothing to m

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4 A Company Is Considering Building A Bridge Across A River The Bridge Would Cost 2 Million To Build And Nothing To M 1 (39.65 KiB) Viewed 56 times

4. A company is considering building a bridge across a river. The bridge would cost $2 million to build and nothing to maintain. The following table shows the company's anticipated demand over the lifetime of the bridge. Price per Crossing Number of Crossings (in thousands) $8 0 7 100 6 200 5 300 4 400 3 500 2. 600 1 700 0 800
a. If the company were to build the bridge, what would be its profit-maximizing price? Would that be the efficient level of output? Why or why not? b. If the company is interested in maximizing profit, should it build the bridge? What would be its profit or loss? c. If the government were to build the bridge, what price should it charge? d. Should the government build the bridge? Explain.
6. For many years, both local and long-distance phone services have been provided by provincially owned or regulated monopolies. a. Explain why long-distance phone service was originally a natural monopoly. a b. Over the past several decades, technological developments have allowed companies to launch communications satellites that can transmit a limited number of calls. How did the growing role of satellites change the cost structure of long-distance phone service? c. In response to these technological developments, some provinces/territories have deregulated the long-distance market in Canada. Local phone service has remained regulated. Why might it be efficient to have competition in long-distance phone service and regulated monopolies in local phone service?