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96% Tue 10:29 PM a E Safari File Edit View History Bookmarks Window Help 99 rpm M smartsite.ucdavis.edu O Secure Search... McAfee k 2600 SmartSite@UCDavis ARE 10 https://smartsite.ucdavis.edu https://smartsite.ucdavis.edu https://smartsite.ucdavis.edu... Chegg eS 4. Table 10.11 Customer Maximum Willingness to Pay me (one-way airfare) $150 Martin pe 2 $130 Adam Tina $110 Tia $900 Voo $70 Kylee $30 Kyler WSers Reference: Ref 10-22 Contro (Table 10.11) Suppose that the marginal cost of a one-way airfare is $30 a. If the airline practices perfect price discrimination, how many customers will purchase one- way airfare? How much producer surplus is earned from perfect price discrimination? e Pics b. Suppose the airline cannot price-discriminate and must sell airfare at a single price. What price does the airline charge per ticket? How many tickets are sold at this price? How much producer surplus is earned? WorkExplanation / Answer
a) Marginal cost of one - way airfare is $ 30 . If the airlines practices perfect price discrimination then 5 customers will purchase on-way airfare . The producer surplus = $ 150 - $ 30
Producer surplus = $ 120
b) Suppose the airline cannot price discriminate and must sell airfare at a single price . The price the airline charges per ticket will be equal to its marginal cost of $ 30
Price = $ 30
At this price 6 tickets are sold ; the producer surplus earned at this price is zero .
Customer Maximum willingness to pay Martin $150 Adam $130 Tina $110 Tia $90 Kylee $70 Kyler $30Related Questions
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