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Devise an optimal two-part tariff pricing policy

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1. Assume you are the owner of a concert hall with 6,000 seats. The demand function for seat tickets is Q = 10,000 - 200P where Q is the quantity demanded and P is the price for a seat ticket. You are charging $30 per ticket and selling tickets to 4,000 consumers. Further assume that you incurred only fixed costs. Is charging $30 the optimal pricing policy? What other pricing policy might you use to increase your profits? Could you increase profits through price discrimination? If so, what type of price discrimination should you use?

2.Assume you run a company that offers a product for which all consumers have an identical demand curve. Each consumer's demand curve is P = 20 - 4Q. The marginal cost of production is $4. Devise an optimal two-part tariff pricing policy.

Reference no: EM131715387

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