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
Illustrate the application of economic theory to some business problems

Q=5K0.4 L0.6 WHERE K is number of mchine,L s number of labour, price of unit is RM24 & wages og each lanour rm12. the company constraint by it budget rm 1500 per time period. a) co

Average Total Costs (ATC) This is total cost per unit of output, obtained by dividing total cost by total output i.e. ATC   =   Total Cost              Total Outp

Explain in brief the relationship between TR,AR and MR under perfect market condition.

Bank of Central Clearance ,Settlement and Transfer This function was first developed by the bank of England toward the middle of the nineteenth century. In 1954, a scheme was

In the short-run the firm can't modify or change overhead factors like equipment, plant and scale of its organisation. In the short-run output can be decreased or increased by chan

Objectives of IMF To achieve these objectives, the following conditions would have to be fulfilled: - i.            Countries should not impose restrictions in their trade

Importance of Income Elasticity If a country is experiencing economic growth, the income of the people will increase.  However, for those engaged in the production of goods wi

Calculate point elasticity of demand for demand function Q=10-2p for decrease in price from Rs 3 to Rs 2

THE DETERMINATION OF EQUILIBRIUM NATIONAL INCOME National income is said to be in equilibrium when there is no tendency for it either to increase or for it to decrease.  The a