The following data reveal how much each consumer is willing to pay for an Ala s

Question

The following data reveal how much
each consumer is willing to pay for an
Ala s kan cruise:
Amy $ 900 Ed $2,000
Bob $1,100 Gigi $1,300
Carol $1,500 Hugo $1,800
Eduardo $ 400 Isabelle $1,500
(a) Draw the market demand for these eight
consumers on the accompanying graph.
(b) If the cruise costs $1,000, how many
passengers will there be?
(c) If the cruise costs $1,000, how much
total revenue will be collected?
(d) If the cruise costs $1,000, how
much consumer surplus will those
passengers enjoy?
(e) If the cruise ship could perfectly price
discriminate, how much more revenue
could it take in?

Explanation / Answer

b.) 6 passengers; only Amy and Eduardo will not be willing to pay for a cruise.

c.) Total revenue collected

= 6 *1000

= $ 6,000

d.) Consumer Surplus

= (1100-1000) + (1300-1000) + (1500-1000) + (1500-1000) + (1800-1000) +(2000-1000)

=$ 3,200

e.) Revenue under Price Discrimination

Expected Revenue = 1100 + 1300 + 15000 + 1500 + 1800 + 2000

= $ 7,700

Revenue Received = $ 6,000

Surplus revenue = $7,700

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.