Hubert owns a plot of land in the desert that isn't worth much. One day, a giant meteorite falls on his property, making a large crater. The event attracts scientists and tourists, and Hubert 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 (D) curves and marginal revenue (MR) curves for the two markets. Hubert’s marginal cost of providing admission tickets is zero Suppose that at first, Hubert charges the same price of $8 per admission in both markets so that the total number of admissions demanded is_______tickets. Suppose now that Hubert decides to
Hubert owns a plot of land in the desert that isn't worth much. One day, a giant meteorite falls on his property, making a large crater. The event attracts scientists and tourists, and Hubert 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 (D) curves and marginal revenue (MR) curves for the two markets. Hubert’s marginal cost of providing admission tickets is zero Suppose that at first, Hubert charges the same price of $8 per admission in both markets so that the total number of admissions demanded is_______tickets. Suppose now that Hubert decides to
Chapter3: Supply And Demand: Theory
Section: Chapter Questions
Problem 8WNG
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Hubert owns a plot of land in the desert that isn't worth much. One day, a giant meteorite falls on his property, making a large crater. The event attracts scientists and tourists, and Hubert 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 (D) curves and marginal revenue (MR) curves for the two markets. Hubert’s marginal cost of providing admission tickets is zero
Suppose that at first, Hubert charges the same price of $8 per admission in both markets so that the total number of admissions demanded is_______tickets.
Suppose now that Hubert decides to charge a different price in each market. To maximize revenue, Hubert should charge_________per admission in Market A and________per admission in Market B. At these prices, he will sell a total quantity of __________admission tickets per day.
Complete the following table by calculating Hubert's total revenue from selling in both markets under the nondiscriminatory as well as the discriminatory price policy.
|
Pricing Policy
|
Total Revenue
|
|---|---|
|
(Dollars)
|
|
| Nondiscriminatory |
|
| Discriminatory |
|
Hubert charges a higher price in the market with a relatively___________ price elasticity of demand .
Transcribed Image Text:Hubert owns a plot of land in the desert that isn't worth much. One day, a giant meteorite falls on his property, making a large crater. The event
attracts scientists and tourists, and Hubert 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 (D) curves and marginal revenue (MR) curves for the two markets.
Hubert's marginal cost of providing admission tickets is zero.
PRICE (Dollars per ticket)
20
18
16
14
12
10
to
80
2
0
+
0
+
3
Market A
MR
12 15 18 21 24
QUANTITY (Admission tickets)
D,
27 30
?
PRICE (Dollars per ticket)
20
18
16
14
12
2
0
+
0
3
Market B
MR PE
12 15 18 21 24 27 30
QUANTITY (Admission tickets)
(?
Transcribed Image Text:Suppose that at first, Hubert charges the same price of $8 per admission in both markets so that the total number of admissions demanded is
tickets.
Suppose now that Hubert decides to charge a different price in each market. To maximize revenue, Hubert should charge $
Market A and S per admission in Market B. At these prices, he will sell a total quantity of
admission tickets per day.
Complete the following table by calculating Hubert's total revenue from selling in both markets under the nondiscriminatory as well as the
discriminatory price policy.
Pricing Policy
Nondiscriminatory
Discriminatory
Total Revenue
(Dollars)
Hubert charges a higher price in the market with a relatively
per admission in
price elasticity of demand.
Expert Solution
Step 1
A market formation is characterized by one seller, selling a unique product in the market. In a monopoly market, the seller faces no competition, as he is the single seller of products with no close substitutes.
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