Question 9 1 pts An airline can sell tickets from Sydney to Melbourne to two typ

Question

Question 9 1 pts An airline can sell tickets from Sydney to Melbourne to two types of customers: business and leisure travelers. Each customer will purchase one ticket only. Assume that the cost of providing either good (flight in economy or business) and the tickets are zero. The valuation or willingness to pay ($ per ticket) each type of buyer place on both types of tickets is presented below Leisure 80 80 Business 120 300 Ticket Economy Business Which of the following pricing schemes yields the highest profits if the firm cannot identify the type of buyer who is making the purchase? Assume that if the customer is indifferent between buying a ticket or not, he buys it Note, Pe is the price of the economy ticket and PB the price of the business ticket. PE-80; PB-80 PE-80; PB-300. PE-300; PB 300 PE-80: PB-259. PE-80: PR-261.

Explanation / Answer

Q) Ans. A. Price of economy class ticket is $80 and Price of business class ticket is $80. It is because if this price is set then there must be sale of 2 tickets. The total value of both tickets will be $160. But in second opinion Pe is 80. So 1 ticket will be sold out. Now for 300 price of business class there is a possibility of selling and not selling. And there is possibility to go to economy class is 1/4. So 1/4 of 300 is 75. Total it would be 80+75 =155. So therefore first one is better.

Question. 8. Answer is 0. If Christian do not charge any fees then Christian will make more profit. Total profit in this case will be $2850.

Question.9. Ans. C. Under first degree price discrimination the marginal revenue curve is the demand curve.

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