Question
GoKart Raceway sells single day tickets to local area residents and travelers . Demand curves for the two groups are as follows: Travelers P T
GoKart Raceway sells single day tickets to local area residents and travelers . Demand curves for the two groups are as follows:
|
|
| Travelers |
|
| PT | = $50 - $0.0025QT |
|
|
| Residents |
|
| PL | = $35 - $0.0005QL |
|
|
|
|
|
|
|
|
Marginal costs are $15 per visitor. Because MC is constant, MC=AVC.
| A. | It is easy to segment the market and price discriminate between the Travelers and Resident customers. Calculate the profit-maximizing price, output, and total profit contribution levels. |
| B. | What are the price elasticities for each group of customers calculated in part A? Are these elasticities consistent with what you would expect given your answers in part A? Explain. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Audit Analytics In The Financial Industry
Authors: Jun Dai
3rd Edition
1787430863, 9781787430860
