Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Suppose the market for air travel has 100 high type consumers and 100 low type consumers. High types are willing to pay $300 for low
Suppose the market for air travel has 100 "high type" consumers and 100 "low type" consumers. High types are willing to pay $300 for low quality tickets and $800 for high quality tickets, whereas low types are willing to pay $200 for low quality tickets and $400 for high quality tickets. Assume the market is supplied by a single firm, and the marginal cost of providing both high and low quality plane tickets is 0. What should be the price for high quality tickets if the firm is engaging in optimal second degree price discrimination? Round your answer to the nearest whole number (e.g. 123)
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