Multiple choice options: Blank1 (12, 4, 8, 16) Blank2 (16, 20, 12, 24) Blank3 (1
ID: 1095258 • Letter: M
Question
Multiple choice options:
Blank1 (12, 4, 8, 16)
Blank2 (16, 20, 12, 24)
Blank3 (16, 12, 20, 8)
Blank4 (8, 16, 12, 4)
Blank5 ($256, $128, $272, $136)
Blank6 ($136, $272, $256, $128)
Blank7 (lower, higher)
2. Price-discriminating monopolist Manuel, a retiree, owns and lives in the desert on a piece of land that isn't worth much. One day, a giant meteor falls in the middle of his property. As it turns out, two groups of people are interested in visiting the meteor: scientists (Market A) and tourists (Market B). Manuel decides to sell tickets to visit the meteor in both Market A and Market B. He stays home all day anyway, so collecting money from visitors isn't a problem for him. Therefore, you can assume he has zero costs. Also, Manuel has a very good memory and will allow only the person who bought each ticket to use it. Thus, you can assume that all tickets are nontransferable. The demand and marginal revenue curves for the two markets are shown on the following two graphs. Suppose Manuel has to charge the same ticket price in each of the two markets. If he sets a price of $16 per ticket, the total quantity demanded will be tickets. Now, suppose Manuel can price discriminate by charging a different price in each market. Because Manuel has no costs, he chooses prices for scientists and tourists that maximize his total revenue. In order to maximize revenue, Manuel should charge per ticket in Market A and per ticket in Market B. At these prices, he will sell a total quantity of tickets. Refer to your answers to the previous two questions. Suppose Manuel decides that he wants to limit admission to 16 people, but he still wants to generate the most revenue possible. If Manuel is forced to charge everyone the same price, he will earn revenues of . if he can price discriminate by charging a different price in each market, he can earn revenues of up to Manuel charges a higher price in the market with price elasticity of demand.Explanation / Answer
1) 12+4 = 16
2) 20 (MR=0 and Price seen fro demand curve)
3) 12 (MR=0 and Price seen fro demand curve)
4) 10+6 = 16
5) 16X12 + 16X4 = 256
6) 20X10 + 12X6 = 272
7) Lower (Price and elasticity are incversely related)
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