Question
Suppose a price discriminating monopolist sells bus tickets to the region's major airport. They have two types of customers students, and non-students. They can verify
Suppose a price discriminating monopolist sells bus tickets to the region's major airport. They have two types of customers students, and non-students. They can verify which customers are students by checking their student IDs. The monopolist has determined that (1) students' inverse demand for tickets is = 80 0.5s and (2) non-students' inverse demand for tickets is n = 100 0.5n. Their marginal cost is given by = t where t = s + n. a. Explain why the monopolist's profit maximizing output occurs where 1 = 2 = agg = . b. Determine the aggregate marginal revenue function for all possible quantities. c. Determine the total number of bus tickets the monopolist will sell and the marginal revenue at that quantity. d. Determine the profit maximizing prices and quantities sold in each market.
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