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3. Different forms of price discrimination Darnell works as a private tutor on evenings and weekends. He has no xed costs, and his opportunity cost
3. Different forms of price discrimination Darnell works as a private tutor on evenings and weekends. He has no xed costs, and his opportunity cost of giving a tutoring session is $125. He has nine potential students each week whose willingness to pay are shown in the following table: Willingness to Pay Student (Dollars per tutoring session) A 200 190 180 170 160 150 140 130 I 120 IQ'HI'I'IUDUJ Suppose Darnell has to charge a single price to all of his students. For each quantity of tutoring sessions he could give, ll in the Total Revenue column in the following table with the most total revenue he could earn at each quantity of sessions. Then, complete the table by computing the marginal revenue at each quantity of tutoring sessions. Students Willingness to Pay Total Revenue Marginal Revenue (Sessions per week) (Dollars per tutoring session) (Dollars per week) (Dollars per tutoring session) 0 O 1 200 2 190 3 180 4 170 5 160 6 150 7 140 8 130 9 120 If Darnell has to charge a single price to all of his students, he will maximize his prot by giving 7 tutoring sessions. This is V than the efcient number, which is v tutoring sessions. If Darnell can practice perfect price discrimination, he should give V tutoring sessions. Now suppose Darnell cannot practice perfect price discrimination, but he is able to nd a hurdle that identifies the group of students who are willing to pay at least $170 for a tutoring session (the \"list price\" submarket), and those who are not (the \"discount price" submarket). In order to maximize his profit under this pricing scheme, he should charge v in the list price submarket and v in the discount price submarket
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