A company is considering building a bridge across a river. The bridge would cost

Question

A company is considering building a bridge across a river. The bridge would cost $2 million to build and nothing to maintain. The following table shows the company's anticipated demand over the lifetime of the bridge: Quantity (Thousands of crossings) Price (Dollars per crossing) 0 50 100 150 200 250 300 350 400 4 0 If the company were to build the bridge, its profit-maximizing price would be$ , and it produce the efficient level of output. build the bridge because profit would be If the company is interested in maximizing profit, it company incurs a loss, be sure to enter a negative number for profit.) (Note: If the If the government were to build the bridge, it should charge a price of $

Explanation / Answer

The profit maximising price would be $4 (TR is highest according to table) and it will produce the efficient level of output at this price.

the company should not build the bridge because the most profit they can make is 800,000 and the cost is 2,000,000. This would result in a loss of 1,200,000.

If the government were to build the bridge, they should charge $4 since this is the price that would minimize loss

No it should not build the bridge since it is incurring losses.

Price Quantity Total Revenue 8 0 0 7 50 350 6 100 600 5 150 750 4 200 800 3 250 750 2 300 600 1 350 350 0 400 0

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.