An amusement park has identified its demand functions as: Q = 50- 3P. The marginal operating cost of each unit of quantity is $5 and
An amusement park has identified its demand functions as: Q = 50- 3P. The marginal operating cost of each unit of quantity is $5 and there are no fixed costs. The park is a monopolist and exercises significant price making power in the market.On performing a more careful market analysis it is determined by the monopolist that its customer set is made up of two sub-markets, adults (A) and children (C). The demand functions for each of these sub-markets are identified as follows: QA = 20 - PA and Qc = 30 - 2Pc C. (12 points) If the monopolist can maintain the separation between the two markets, what level of output should be produced in each market and what price will prevail? What are total profits in this situation
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