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Unformatted text preview: Qc=7Pc QA=9Pa 1. Inverse a. Pc=7Qc Pa=9Qa MC=1 2. MR a. MRc=72Qc MRA=92QA 3. MR=MC C: 72Qc=1 Q*C=3 A: 92QA=1 Q*A=4 4. Sub back into demand a. P*C=73=4 P*A=94=5 Elasticity: Ec=∆QdP∙P*Q*=1∙43=43 EAdults (demand)=1∙54=54 54<43 adults Children inelastic Elastic b. c. d. Common Price for both groups e. Qc=7P QA=9P _______________________ f. QT=QC+QA=162p Inverse p=812Q MRT=8Q MRT=MC 9Q=1 Q*=7 Substitute back into total demand P*common=812Q =872=4.5 Summary Third degree price discrimination P*c=4 child P*A=5 (adult) g. Common P*Common=4.5 Gain in Profits TDPD: pi= *4+4*53+41 3 Common pi=7*4.7(1) h. Eo= 2 (march), 4 (april) i. j. Same MC PaPm=1+1Em1+1Ea=1+121+14=1234=23 PAPMPM=PAPM1=231=13 30% discount for april skiers k. l. Suppose there is just one type of consumer, whose demand for r ides at the PNE is g iven by Qd = 16 – 4P. The marginal cost of supplying a r ide is $2. Assuming the P NE is a monopolist, what is the optimal upfront / admission price and the optimal price per r ide? m. Qd=164p MC=2 1.) P*→Price per Ride 2.)Admission P*=MC=2 INVERSE:p=414Q When p=2 Q=1642=8 Admission=CS =12428=8 n. o. ...
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 Winter '09
 Brian

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