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10. You work for an airline. You have two types of customers, call them business and recreational. Business travelers have a less elastic demand than
10. You work for an airline. You have two types of customers, call them business and recreational. Business travelers have a less elastic demand than recreational travelers, so you decide to price discriminate. Business travelers' demand is Pb = 600 - 5%; while the demand by recreational travelers Pr I 300 - 97,. Your marginal cost of ying someone on this route is MC = 100. How much should you charge business travelers and how much for recreational travelers? 9. The government decides to place a $60 unit tax on a product. The following elasticities are known: Ed = - 1.8; Es = 5.2. By how much does the price paid by the demanders increase because of this tax
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