12.18. There is another way to solve Learning-ByDoing Exercise 12.5. Recall that marginal revenue can be written as MR ! P # ($P/$Q)Q. By factoring out P, we can write Since third-degree price discrimination means that marginal cost equals marginal revenue in each market segment, the profit-maximizing regular and vacation fares will be determined by MRR ! MRV ! MC.

(Remember the marginal cost of both classes of service is assumed to be the same in the exercise.) Thus Use this relationship to verify the answer given in the exercise.