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Find the profit-maximizing quantity of lift tickets

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Reference no: EM132488650

Suppose that Squaw Valley knows that it faces the following demand equations and corresponding marginal revenue equations for ski lift tickets:

Weekend Demand:

P = 160-1.5Q

Weekday Demand:

P = 100-Q

Marginal Cost is a constant $10 per lift ticket.

a) Find the profit-maximizing quantity of lift tickets for each separate consumer group. Find the profit-maximizing price for each.

b) Calculate total profit received from each separate consumer group.

c) Draw two separate graphs for weekend demand and weekday demand. In your graph include a marginal revenue curve and marginal cost curve. Show the profit maximizing price and output for each graph.

d) What would happen if Squaw Valley charged $70 every day of the week. Would this maximize profits? Why or why not?

Reference no: EM132488650

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