Tourists’ demand in the market is estimated to be, QT(P) = 1500−P 

Locals’ demand in the market is estimated to be, QL(P ) = 4000 − 4P 

(where P represents the price of a ticket in dollars)
It is estimated that it will cost the tourism operator $20 to make each ticket available, and that there will be no fixed costs apart from the annual Ecological Tourism Licence fee. 

 

1. Assume that the profit-maximizing price is above the “choke-price” for locals. Find the profit-maximizing quantity and price (Q and P). Is this price consistent with the assumption?
2. What is the level of producer surplus under uniform pricing? 
3. How many tickets will be available to locals, and what is the level of local consumer surplus (CSL)?
4. How many tickets will be available to tourists, and what is the level of tourist consumer surplus (CST )?