This represents the market for interstate bus travel. You can see two sets of demand curves and their corresponding marginal revenue curves: Demand 1 & Marginal Revenue 1; and Demand 2 & Marginal Revenue 2. The two sets of curves represent two types of consumers: those whose demand is relatively inelastic (have few choices besides riding the bus) and those whose demand is relatively elastic (have several alternatives to riding the bus. As shown in the diagram, both the marginal and average costs of producing this service are the same.
Part 1: Use the quadrilateral tool to show the profit area for the monopolist that faces the relatively inelastic demand and label it Profit 1.
Part 2: Use the quadrilateral tool to show the profit area for the monopolist that faces the relatively elastic demand and label it Profit 2.
Coordinates: (14.00, 54.75) IUD 9|] SD TD Price per Bus Ride E-III 5|] 4D 3|] 2|] 1|] uping n III-”‘4′ 1|I| ED 3|] 4D 5|] an m an an IUDQuantity of Bus Rides — Demand 1— Demand 2— Marg Revenue 1— Marg Revenue 2— MC=AC — Pro?t 1 — Pro?t 2 — Unselected