What kind of price discrimination, Managerial Economics

Imagine an amusement park with a sole attraction: a roller coaster. For simplicity, the cost of providing a ride is zero. There is a single consumer with demand for rides on the roller coaster given by P(Q)=1 - Q. Let the park not only charge a price p per ride but also an access fee F at the entrance.

(a) What is the pro?t maximising combination of p and F? Illustrate graphically. [Hint: ?rst, for a given price per ride p, how much is the consumer willing to pay to access the roller coaster - you know a measure for that, and this will be the optimal ?xed fee for any given p,say F(p). Looking at the corresponding pro?ts, you will see what the optimal p is.]

(b) What kind of price discrimination is this (?rst, second or third degree)?

(c) Is there still an ineffciency?

(d) Do your answers change if there are instead many, say e. g. 100, identical consumers with the given demand?

Posted Date: 3/9/2013 5:32:07 AM | Location : United States







Related Discussions:- What kind of price discrimination, Assignment Help, Ask Question on What kind of price discrimination, Get Answer, Expert's Help, What kind of price discrimination Discussions

Write discussion on What kind of price discrimination
Your posts are moderated
Related Questions
TERMS OF TRADE The relation between the prices of a country's exports and the prices of its imports, represented arithmetically by taking the export index as a percentage of t

The Social Cost of Unemployment i.      For the individual, there is the demoralizing effect which can be devastating particularly when they are old.  This is because as some

In the national income analysis, investment refers to the value of than part of the aggregate output for any given time period which takes the form of construction of new structure

Model Specification   We proceed with the model specification in the following steps. 1)  The economy is composed of competitive firms (F  in number) and identical workers

definition of total revenue,marginal revenue,average revenue

Drafting of Production Policy: Demand forecasts assists in drafting appropriate production policy so that there may not be any space between future demand and supply of a product.

SIGNIFICANCE  OF  THE  CONCEPT  AND THEORY OF SEARCH UNEMPLOYMENT   From what has been  said earlier, you understand the significance of the theory of search  unemployment  as

A monopolist faces a straight line demand curve which passes through the point Rs 10 per ton on the price-cost axis and through the point 8000 tons on the quantity axis. The fir

Interest and the Keynesian Liquidity Preference Theory Interest is a factor income in that it is considered to be payment to or return on capital in the sense that it is payme

Dan and Ann are chemical engineers working for a biotech company. Each of them would like to be promoted to a managerial position, but only one of them can get the job. Their super