Mathematics, 12.12.2019 05:31 Yasido888
San francisco airport (sfo) is an independent entity that charges airlines landing fees for the right to use their airport. let the landing fee charged by sfo be w and let demand for flights on united, the dominant airline at sfo, be q(p) = 800 − p. for this question, assume united is a monopolist airline at sfo and has no other marginal costs besides landing fees at sfo.
(a) what is united’s profit function?
(b) what price will united set for its flights out of sfo and how does it depend on w? what is the quantity of flights sold by united, and how does it depend on w?
(c) what landing fee, w, will sfo set? what are its profits? what are united’s profits?
(d) suppose the department of justice allowed sfo airport and united to merge. what happens to consumer surplus? what happens to the combined profits of sfo and united? what is the reason for those changes?
Answers: 2
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