Question
The following figure shows the demand for haircuts at the Uppercuts Hairdressing Salon. a) If the salon charges a single price of $15, what will
The following figure shows the demand for haircuts at the Uppercuts Hairdressing Salon.
a) If the salon charges a single price of $15, what will its total daily revenue be?
b) Suppose, instead, that the salon practises price discrimination and now charges $21 for haircuts to regulars but only $15 to retirees and economics instructors. What will its new total daily revenue be?
c) What is the value of consumer surplus that the salon has captured as a result of price- discriminating?
d) Show in the area that represents the value of consumer surplus captured.
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