Susan owns a plot of land in the desert that isn't worth much. One day, a giant meteorite falls on her property, making a large crater. The event attracts scientists and tourists, and Susan decides to sell nontransferable admission tickets to the meteor crater to both types of visitors: scientists (Market A) and tourists (Market B). The following graphs show daily demand ( DD ) curves and marginal revenue ( MRMR ) curves for the two markets. Susan's marginal cost of providing admission tickets is zero. Market AMarket B20201818161614+14Slope: -0.67121010Slope: -0.674422MR. P:OMR3121518212430312151821242730QUANTITY (Admission tickets)QUANTITY (Admission tickets)Suppose now that Susan decides to charge a different price in each market. To maximize revenue, Susan should charge $Market A and Sper admission inper admission in Market B. At these prices, she will sell a total quantity ofadmission tickets per day.Complete the following table by calculating Susan's total revenue from selling in a market under the discriminatory price policy.Total RevenuePricing Policy(Dollars)highDiscriminatorylowSusan charges a lower price in the market with a relativelyprice elasticity of demand.PRICE (Dollars per ticket)27PRICE (Dollars per ticket)

We are going to use Microeconomics concepts such as price discrimination and profit maximisation…

Answered: Market A Market B 20 20 18 18 18 18 14…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Susan owns a plot of land in the desert that isn't worth much. One day, a giant meteorite falls on her property, making a large crater. The event attracts scientists and tourists, and Susan decides to sell nontransferable admission tickets to the meteor crater to both types of visitors: scientists (Market A) and tourists (Market B). The following graphs show daily demand ( DD ) curves and marginal revenue ( MRMR ) curves for the two markets. Susan's marginal cost of providing admission tickets is zero.

Market A
Market B
20
20
18
18
16
16
14
+
14
Slope: -0.67
12
10
10
Slope: -0.67
4
4
2
2
MR. P:O
MR
3
12
15
18
21
24
30
3
12
15
18
21
24
27
30
QUANTITY (Admission tickets)
QUANTITY (Admission tickets)
Suppose now that Susan decides to charge a different price in each market. To maximize revenue, Susan should charge $
Market A and S
per admission in
per admission in Market B. At these prices, she will sell a total quantity of
admission tickets per day.
Complete the following table by calculating Susan's total revenue from selling in a market under the discriminatory price policy.
Total Revenue
Pricing Policy
(Dollars)
high
Discriminatory
low
Susan charges a lower price in the market with a relatively
price elasticity of demand.
PRICE (Dollars per ticket)
27
PRICE (Dollars per ticket)

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