Question: The Lone Star Transportation Company hauls coal and manufactured goods. The demand curve for its services by the coal producers is

P _C = 495 – 5Q _C

where P _C is the price (in dollars) per ton-mile of coal hauled and Q _C is the number of ton-miles of coal hauled (in thousands). The demand curve for its services by the producers of manufactured goods is

P _M = 750 – 10Q _M

where P _M is the price (in dollars) per ton-mile of manufactured goods hauled and Q _M is the number of ton-miles of manufactured goods hauled (in thousands). The firm’s total cost function is

TC = 410 + 8(Q _C + Q _M )

where TC is total cost (in thousands of dollars).

1. What price should the firm charge to haul coal?
2. What price should the firm charge to haul manufactured goods?
3. If a regulatory agency were to require the firm to charge the same price to haul both coal and manufactured goods, would this reduce the firm’s profits? If so, by how much?

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