s. Price monopolist Dina owns a plot of land in the desert that isn\'t worth muc

Question

s. Price monopolist Dina 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 Dina decides to sell nontransferable admission tickets to the meteor crater to both types of visitors: scientists (Market A) and tourists (Market B). The folowing graphs show daily demand (D) curves and marginal revenue (MK) curves for the two mackets Dina's marginal cost of providing admission tickets is zere. Market A Market B 20 19 16 14 2 12 10 16 10 0369 12 15 18 21 24 27 30 QUANTITY (Admession Sckes 03 6 9 12 15 18 21 24 27 30 QUANTITY Admission tckets) Sppose that at first, Dina charges the same price of $8 per adimission in both markets so that the tatal number of admissions demanded is Suppose now that Dina decides to charge a different price in each market. To maximize revenue, Dina should charge 3 per admissioni Market A and s per admission in Market B. At these prices, she will sell a sotal quantity of admission tickets per day DC

Explanation / Answer

1. Total demand = Market A + Market B = 18 + 6 = 24 tickets

2. $ 10 in Market A because TR is maximized where MR = 0

3. $ 6 in Market B because MR = 0 at this price

4. Total demand = 15 + 9 = 24 tickets

5. Total Revenue under nondiscriminatory = 24 units x 8 = $ 192

6. TR under discriminatory = 15 x 10 + 9 x 6 = 150 + 54 = $ 204

7. Inelastic

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