Sean owns a plot of land in the desert that isn\'t worth much. One day, a giant
ID: 1132533 • Letter: S
Question
Sean owns a plot of land in the desert that isn't worth much. One day, a giant meteorite falls on his property, making a large crater. The event attracts scientists and tourists, and Sean decides to sell nontransferable admission tickets to the meteor crater to both types of visitors: scientists Market and tourists (Market B). The following graphs show daily demand (D) curves and marginal revenue (MR) curves for the two markets. Sean's margina cost of providing admission tickets is zero. Market A Market B 20 18 16 14 20 18 16 14 & 12 10 10 6 MR 03 6 91215 18 21 24 27 30 QUANTITY (Admission tickets) 03 6 9 12 15 18 21 24 27 30 QUANTITY (Admission tickets)Explanation / Answer
Suppose that at first, Sear charges same price of $ 8 per admission in both markets so that the total number of admissions demanded is 18 +6 =24. Tickets
To maximize revenue Sean should charge $ 10 per admission in market A and $ 6 in market B. at these prices , he will sell a total quantity of 15+9 = 24 tickets per day.
Non discriminatory pricing policy and total Revenue = 24*8
= $ 192
Discriminatory pricing policy and TR = 10*15 +6*9
= 150+54
= $204
Sean charges high price in market with low elasticity of demand.
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