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4. A night-club owner has both student and adult customers. The demand for drinks by a typical student is QS18 - 3P. The demand
4. A night-club owner has both student and adult customers. The demand for drinks by a typical student is QS18 - 3P. The demand for drinks by a typical adult is QA 10-2P. There are equal numbers of students and adults. The marginal cost of each drink is $2. What price will the club owner set if it is not possible to discriminate between the two groups? What will the total profit be at this price? b. If the club owner could separate the groups and practice third-degree price discrimination, what price per drink would be charged to members of each 5. If the club owner in problem 4 can "card" patrons and determine who among them is a student and who is not and, in turn, can serve each group by offering a cover charge and a number of drink tokens to each group, what will the cover charge and number of tokens be for students? What will be the cover charge and number of tokens given to adults? What is the club owner's profit under this regime? (phones) and can make local and long dis- tance (within the United States and Canada) calls for free so long as the total number of minutes used per month does not exceed the plan maximum. The price and maximum minutes per month for each plan are: Plan 1: 500 minutes for $50; Plan 2: 750 minutes for $62.50; and Plan 3: 1000 minutes for $75.00. Assuming that there are equal numbers of consumers in each group and that the value of a marginal minute for each group declines at the rate of $0.0004 per minute used, work out the demand curves consistent with this pric- ing. What surplus will each consumer group enjoy? group? What would be the club owner's 7. Now return to our ski resort owner in the text profit in this case? in which low-demand consumers have an inverse demand of: P = 12-Q, while high- demand consumers have an inverse demand of: P 16 Q. Marginal cost per lift ride is again $4. Assume that there are N,, high- demand customers and N, low-demand cus- tomers but that the ski resort owner does not know the type of each skier. Show that under these circumstances the firm will only serve low-demand customers, i.e., will only offer both packages if there are at least as many low-demand consumers as high-demand Nh ones. In other words, 1 in order for N low-demand consumers to be served. 6. A local phone company has three family plans for its wireless service. Under each of these plans, the family gets two lines At Starbuck's coffee shops, coffee drinkers have the option of sipping their lattes and cappuccinos while surfing the Internet on their laptops. These connections are made via a connection typically provided by a wireless firm such as T-Mobile. Using a credit card, customers can buy Internet time in various packages. A one-hour package currently goes for an average price of $6. A day pass that is good for any time in the next 24 hours sells for $10. A seven-day pass sells for about $40. Briefly describe the pricing tactics reflected in these options.
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