Question
11. Consider an amusement park monopolist who supplies rides to two types of consumers: low and high demand consumers.Each low demand consumer has a demand
11. Consider an amusement park monopolist who supplies rides to two types of consumers: low and high demand consumers.Each low demand consumer has a demand curve for rides given by Q=(6-P)/0.3 and each high demand consumer has a demand curve for rides given by Q=40-2P, where Q is the number of rides.Rides can be provided at virtually negligible cost, so marginal cost is considered to be zero dollars per ride.Suppose the monopolist sells to both types of consumers using the same two-part tariff for each group, but with an additional block pricing twist for high demand consumers.Specifically, the monopolist charges every consumer a common fixed fee to enter the park, which entitles every consumer to free rides up to a certain limit.The monopolist sets the number of free rides equal to the number of rides associated with the intersection of a low-demand consumer's demand curve and the monopolist's marginal cost curve, and it sets the common fixed fee to leave a low-demand consumer with exactly zero surplus for the free rides.If more than the limit number of free rides is demanded, the monopolist charges an optimal surcharge price of PS per additional ride.How much money will a high demand consumer spend at the park given this pricing scheme?
A. $150
B. $75
C. $50
D. $110
E.$60
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