Question
In: Economics
Consider the tourism industry in a large city. The market for tours is perfectly competitive in...
Consider the tourism industry in a large city. The market for
tours is perfectly competitive in the city. Firms have no fixed
costs, and all firms have the same cost structure. The daily cost
of providing tours for any given firm is listed in the table
below.
| Total Tours | Cost of Providing Tours |
|---|---|
| 1 | $36 |
| 2 | $68 |
| 3 | $96 |
| 4 | $120 |
| 5 | $140 |
| 6 | $156 |
| 7 | $168 |
| 8 | $184 |
| 9 | $204 |
| 10 | $228 |
| 11 | $256 |
| 12 | $288 |
What we know about the market demand for tours is given in the
table below.
| Price | Quantity Demanded |
| $32 | 26 |
| $28 | 78 |
| $24 | 130 |
| $20 | 182 |
| $16 | 234 |
| $12 | 286 |
A law passed by the city requires the price of tours to be in integers (whole numbers), and people cannot buy fractions of a tour. In a long-run equilibrium in the tourism market, there would be _______________ tour companies providing tours, the equilibrium price will be $________ , and each tour company will provide____________ tours daily.
Solutions
Rahul Sunny answered 8 months agoRelated Solutions
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