Boeing’s Starliner Is Close to Breaking SpaceX’s Astronaut Monopoly

When Boeing’s Starliner is available, NASA will be able to make more trips to the International Space Station. Most importantly, the Starliner will break SpaceX’s monopoly on flying astronauts for western countries and companies. Currently, SpaceX has serious pricing power.—qz.com

Answer the following questions to check your understanding of the story.

1) How does SpaceX determine the quantity of rides to provide and the price to charge?

SpaceX _______________.

a) provides the quantity of rides at which marginal cost equals marginal revenue, and charges a price that equals marginal revenue

b) provides the quantity of rides that its customers require, and charges the highest price its customers are willing to pay

c) provides the quantity of rides that minimize average total cost, and charges a price that equals marginal revenue

d) provides the quantity of rides at which marginal cost equals marginal revenue, and charges the highest price that its customers are willing to pay

2) Now suppose that Boeing’s Starliner enters the market and that SpaceX and Boeing form a cartel and agree to maximize joint profits. How does compliance with the cartel agreement determine the price?

If _______________ cheats on the cartel agreement, then the price will _______________.

a) neither firm; lie between the price in a perfectly competitive market and the price charged by a monopoly

b) one firm; lie between the price in a perfectly competitive market and the price charged by a monopoly

c) one firm; be the price charged in a perfectly competitive market

d) both firms; be the price charged by a monopoly

Boeing’s Starliner Is Close to Breaking SpaceX’s Astronaut Monopoly

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