Question

In: Economics

A railroad faces the demand curve for transporting coal and grain as follows: Pc=38-­Qc, where Pc...

A railroad faces the demand curve for transporting coal and grain as follows:

Pc=38-­Qc, where Pc and Qc are the price to transport coal and the quantity of coal.

Pg=14-­0.25Qg, where Pg and Qg are the price to transport grain and the quantity of grain.

The marginal cost to transport either good is constant and equal to 6.

What price will the railroad charge for each?

Solutions

Expert Solution

Given,

Equate it to MC

and,

Differentiate total revenue wrt Qg

Now, equate it to MC

Plug in in the demand function

Price for coal = $ 22

Price for grains = $ 10

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Rahul Sunny answered 1 year ago
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