3rd Degree price discrimination. Sal's satellite company broadcasts TV to subscribers in Los Angeles and New York. The demand functions for each of these two groups are:PNY 150 3 * QNY or QNY = 50 - 1/3 * PNY3/2 * QLA or QLAPLA 12080- 2/3 PLAwhere Q is in thousands of subscriptions per year and P is the subscription price per year. The cost of providing Q units of service is given byC 100030 * Q and MC 30where Q QNY QLAWhat are the profit maximizing prices and quantities for New York and Los Angeles markets?a) Draw the graphs of both the NY and LA markets and determine the optimum prices and quantities. Note thatMRNY150 6 QNY and MRLA = 120 - 3 * QLAb) What are the elasticities of demand for the NY and LA markets?c) For third degree price discrimination, what is the relationship between pricing and elasticity of demand in the two markets?d) Under what conditions can a firm do third degree price discrimination?

Profit- maximization in monopoly market under 3rd degree price discrimination occurs when MR =…

Answered: 3rd Degree price discrimination. Sal's…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The graph above is for the market for broadband home internet. Currently the internet service providers are charging the monthly subscription price of $50. Calculate the total revenue at this price level. 5,000 $4,500 $2,500 $9,000
Students were able to obtain these tickets, make fictitious reservations, cancel the reservations at the last minute, and secure a seat on the flight at a discounted price. Answer the following questions. 1. Is this a form of price discrimination? Why? Include in your analysis differing levels of elasticity, if relevant, and any other feature 2. Why would an airline use this practice? Provide a dollar and cents example. 3. The airlines caught up with this scheme, what principal of price discrimination did the students violate so as to end it?
Suppose an airline sells air tickets to two types of customer - business travelers and vacation travelers. Their estimated demand elasticities are -2.5 and -4.0 respectively. Suppose the marginal cost is constant at $240, and the services provided to the two types of customer are similar a. Based on the given information, explain with TWO practical reasons whether the airline should charge a higher price on business travelers or vocational travelers. Explain without calculation. b. Calculate the fares the airline should charge on the air tickets sold to the respective types of customers. Show your calculations. c. Suggest TWO practical methods the airline can differentiate the two types of customers and charge them the corresponding fares. Explain briefly
Discuss to what extent you agree with the following statements Price discrimination is beneficial for the society in general but it is difficult to practice in real world
Q3) How is peak-load pricing a form of price discrimination? Can it make consumers better off? Give anexample.
For each example, select the type of price discrimination that is being used. A firm charges each consumer their reservation price: A tennis pro charges $15/hour for lessons for children and $30/hour for lessons for adults: Amazon Prime charges $12.99/month plus the price of all goods purchased. A firm charges only $0.25 more for a large soda than a small soda. A firm charges more for electricity used during the day than at night.
Q3) How is peak-load pricing a form of price discrimination? Can it make consumers better off? Give anexample.
Suppose a movie theater determines that the elasticity of demand for movie tickets is -2.0 for senior citizens and –1.5 for adults under age 65, and the marginal cost is $2 per consumer. Use the Lerner index to determine how much senior citizens should be charged and how much adults under age 65 should be charged. A different movie theater, which faces the same marginal costs, charges consumers $6 for matinee movies and $10 for evening movies. Use the Lerner Index to calculate the price elasticity of demand for matinee consumers and evening consumers.
ЕОC 16.04 Which of the below is NOT an example of price discrimination? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. Airlines charge a lower price for round trips than one-way trips. a b Many Universities provide financial aid to needy students. Shops provide discount coupons to the public. Gas prices are different throughout the city.
Q3) How is peak-load pricing a form of price discrimination? Can it make consumers better off? Give anexample.
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