Gulliver's Cruises is the only line operating cruises between the islands of Lilliput and Blefuscu, in the South Indian Ocean. Twenty percent of Gulliver's potential customers are high-end passengers, who really value good service and are willing to pay a substantial premium for it. The other 80 percent are regular passengers. The cruise line can offer two types of cabin to its passengers: first-class or economy. The table below describes the willingness to pay for each category of the cabin by each type of passenger. The table also presents the marginal costs of each type of cabin for the cruise line. Throughout this question, ignore any sort of capacity constraints faced by Gulliver's? that is, assume that Gulliver's can offer as many cabins of each category as it wants. Also, for simplicity, assume that all cabins are individual, so (i) each passenger buys at most one cabin, and (ii) two or more passengers cannot divide the same cabin. All figures are in dollars.

Each type of passenger calculates the net payoff (benefits minus price) that she would get from each cabin and buys the one that would give the higher net payoff, provided that this payoff is non-negative. If both categories of the cabin give equal, non-negative net payoffs for a passenger, she buys first-class; if both cabins have a strictly negative net payoff for a passenger, she does not buy any of them. Assume that Gulliver wants to maximize its expected profits.

Cabin Costs Willingness to pay Regular passenger Upper-regular High-end First-class 80 100 120 160 Business 50 85 100 110 Economy 40 80 85 90\f