Important information about profit maximizing price A firm is considering building a bridge The cost to build the bridge is $2 million with no maintenance costs The following table shows demand for...

Important information about profit maximizing price

A firm is considering building a bridge The cost to build

the bridge is $2 million with no maintenance costs The following table shows

demand for bridge:

Price per crossing #

of crossings

$8 0

7 100

6 200

5 300

4 400

3 500

2 600

1 700

0 800

a What is the profit maximizing price?

b What is the efficient level of output? why?

c If the firm is interested in maximizing profit, should it

build the bridge?

d If the government was to build the bridge, what price

should the government charge?

e Should the government build the bridge? Why?