Economics Problem 11-20, 11-21, 11-06, 11-04

QUESTION

Problem 11-20BAA is a private company that operates some of the largest airports in the United Kingdom, including Heathrow and Gatwick. Suppose that BAA recently commissioned your consulting team to prepare a report on traffic congestion at Heathrow. Your report indicates that Heathrow is more likely to experience significant congestion between July and September than any other time of the year.Based on your estimates, demand isQ1d= 600 – 0.25P, whereQ1dis quantity demanded for runway time slots between July and September. Demand during the remaining nine months of the year isQ2d= 220 – 0.1P, whereQ2dis quantity demanded for runway time slots.The additional cost BAA incurs each time one of the 80 different airlines utilizes the runway is £1,100 provided 80 or fewer airplanes use the runway on a given day. When more than 80 airplanes use Heathrow’s runways, the additional cost incurred by BAA is £6 billion (the cost of building an additional runway and terminal). BAA currently charges airlines a uniform fee of £1,712.50 each time the runway is utilized.What price should BAA charge for runway slots between July and September?£What price should BAA charge for runway slots for the remaining nine months?£Problem 11-21Suppose the European Union (EU) is investigating a proposed merger between two of the largest distillers of premium Scotch liquor. Based on some economists’ definition of the relevant market, the two firms proposing to merge enjoyed a combined market share of about two-thirds, while another firm essentially controlled the remaining share of the market. Additionally, suppose that the (wholesale) market elasticity of demand for Scotch liquor is -1.9 and that it costs $16.90 to produce and distribute each liter of Scotch.Based only on these data, provide quantitative estimates of the likely pre- and postmerger prices in the wholesale market for premium Scotch liquor.Instruction:Do not round intermediate calculations. Round your final answers to the nearest penny (two decimal places).Pre-merger price: $Post-merger price: $Problem 11-06A monopoly is considering selling several units of a homogeneous product as a single package. A typical consumer’s demand for the product isQd= 60 – 0.5P, and the marginal cost of production is $80.a. Determine the optimal number of units to put in a package.unitsb. How much should the firm charge for this package?$Problem 11-04You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Group 1’s elasticity of demand is -2, while group 2’s is -6. Your marginal cost of producing the product is $10.a. Determine your optimal markups and prices under third-degree price discrimination. Instruction: Round your answers to two decimal places.Markup for group 1:Price for group 1: $Markup for group 2:Price for group 2: $

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