A basketball club is the only one in its region and is therefore able to behave like a monopolist. It sells tickets to Adults (A) and Juniors (B), whose demand curves are given by: Pa! = 120 − Qa! Pj = 60 − Qj" Additionally, the club’s total costs are given by TC = 10Q a) Initially, the club sets its price by charging all supporters the same price, according to the aggregate market demand curve. Calculate the maximising output, price and the resulting profit for the club as well as consumer surplus. b) The club hires an economist to consider its pricing strategy and receives the advice that it should charge different prices to each type of supporter. Find the prices it sets in both markets, the sales (output) in each and its overall level of profit and illustrate 3 profit maximising outputs and prices of each consumer type on a graph (one graph for each type of consumer). Calculate consumer surplus in this case. c) What conditions must be satisfied for a producer to be able to implement a policy of
A basketball club is the only one in its region and is therefore able to behave like a
monopolist. It sells tickets to Adults (A) and Juniors (B), whose
Pa! = 120 − Qa!
Pj = 60 − Qj"
Additionally, the club’s total costs are given by TC = 10Q
a) Initially, the club sets its
the aggregate market demand curve. Calculate the maximising output, price and the
resulting profit for the club as well as
b) The club hires an economist to consider its pricing strategy and receives the advice
that it should charge different prices to each type of supporter. Find the prices it sets
in both markets, the sales (output) in each and its overall level of profit and illustrate 3
profit maximising outputs and prices of each consumer type on a graph (one graph for
each type of consumer). Calculate consumer surplus in this case.
c) What conditions must be satisfied for a producer to be able to implement a policy of
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