In some cities, Uber has a monopoly on ride-sharing services. In one of these cities, the...

In some cities, Uber has a monopoly on ride-sharing services. In one of these cities, the demand curve on weekdays is given by P = 50 - Q. However, during weekend nights, or surge hours, the demand for rides increases dramatically and the new demand curve is P = 100 - Q. Assume that the marginal cost and the total fixed cost are both zero.

1. Determine the profit maximizing price during weekdays and during surge hours.

2. Determine the profit maximizing price during weekdays and during surge hours if MC = 10 instead of zero.

3. Draw a graph showing the demand, marginal revenue, and marginal cost curves during surge hours from part (2), indicating the profit maximizing price and quantity. Determine Uber’s profit and the DWL during surge hours, and show them on a graph.

ANSWER ALL PARTS THANKS

Expert Solution

Rahul Sunny answered 7 months ago

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