What are your optimal prices to the two types of travelers

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Reference no: EM13155508

You run an airline. You have constant marginal costs of $10 per passenger. The inverse demand for your product is P = 200 - 0.1Q in for tourists and P = 500 - 0.2Q in for business travelers.

1. If you price discriminate, what are your optimal prices to the two types of travelers?

2. How would you prevent arbitrage?

Reference no: EM13155508

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