Question
Pole Position , a retailer at Destiny Mall, has a variable cost of $5 per lap driven. It has identified two segments of customers: Hard-Core
Pole Position, a retailer at Destiny Mall, has a variable cost of $5 per lap driven. It has identified two segments of customers: Hard-Core drivers and Just-For-Fun drivers. For simplicity, throughout this problem, assume there is exactly one customer in each of the two segments. Market research has revealed how each segment values the experience, depending on how many laps are raced:
| # of Laps | Hard-Core Total Benefit ($) | Just-For-Fun Total Benefit ($) |
| 1 | $15 | $25 |
| 2 | $29 | $37 |
| 3 | $42 | $43 |
| 4 | $54 | $48 |
| 5 | $65 | $50 |
| 6 | $74 | $51 |
| 7 | $81 | $50 |
| 8 | $87 | $40 |
| 9 | $90 | $20 |
| 10 | $89 | $10 |
2. Suppose Pole Position only had one Hard-Core driver and no Just-For-Fun drivers.
- What price per lap would maximize its profit?
- At this price, how many laps would a Hard-Core driver purchase?
- How much profit would Pole Position earn from these sales?
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