3. Suppose that ABC company plans to build a subway train to provide better alternatives forFilipino commuters to avoid heavy traffic and delay during rush hour. Apparently, the subway canlast up to 50 years only that its cost $ 5.5 million to build it. Assuming that it cost nothing for itsmaintenance. Consider the table below that shows potential demand of the subway train of theABC company. For now, disregard the potential variety of the passenger's demographic. Fare price in dollars Number of$876543210Passengers (inthousand)01002003004005006007000a. Determine the profit maximizing price of ABC company. Does this price equivalent to theefficient level of output? Briefly explain.b. Do you think that its practical for ABC company to build the subway train if it intends tomaximize profit? Why or why not?c. What do you think is the efficient price to set for the commuters if the government will buildthe subway train? Explain.d. Who among the government and the ABC company should build the subway train?Explain.e. Supposed that the government will perfectly price discriminates among the passengersthis time, do you think someone will be worse off? Explain.

Efficient level of output is said to be the point deviating from which consumer surplus cannot be…

3. Suppose that ABC company plans to build a subway train to provide better alternatives for Filipino commuters to avoid heavy traffic and delay during rush hour. Apparently, the subway can last up to 50 years only that its cost $ 5.5 million to build it. Assuming that it cost nothing for its maintenance. Consider the table below that shows potential demand of the subway train of the ABC company. For now, disregard the potential variety of the passenger's demographic.

3. Suppose that ABC company plans to build a subway train to provide better alternatives for Filipino commuters to avoid heavy traffic and delay during rush hour. Apparently, the subway can last up to 50 years only that its cost $ 5.5 million to build it. Assuming that it cost nothing for its maintenance. Consider the table below that shows potential demand of the subway train of the ABC company. For now, disregard the potential variety of the passenger's demographic.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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