The San Francisco Ferry (SFS) has a monopoly on (water) travel between Oakland and downtown San Francisco. SFS serves two groups of consumers: locals with demand P_L = 48 - 0.1Q_L, and MR_L= 48 - .2Q_L and tourists with demand P_T = 60 - 0.1Q_T and MR_T = 60 - 0.2Q_T. If the demand curves are added horizontally, they yield a marginal revenue curve MR = 54 - .1Q. SFS's cost of providing rides between San Fran and Oakland is C(Q) = 20Q + 0.035Q², where Q = Q_L + Q_T. Given C(Q), MC = 20 + 0.07Q.

a) Suppose SFS is restricted to set a single price for both markets (i.e. no price discrimination). What price does it set? How much profit does the firm collect?

b) How much consumer surplus is generated for each group (locals and tourists)?

c) Using zip codes, suppose SFS is able to set a single price for each market (i.e. third-degree price discrimination). What prices does the firm set? How much profit does it collect?

d) How much consumer surplus is generated for each group?