The Snow City Ski Resort caters to both out-of-town skiers and local skiers. The

Question

The Snow City Ski Resort caters to both out-of-town skiers and local skiers. The demand for ski tickets of out-of-town skiers is given by Qo = 600 - 10 Po, while the demand for ski tickets of local skiers is given by Ql = 600 - 20 Pl . The marginal cost of servicing a skier of either type is $10. If Snow City Ski Resort (third-degree) price discriminates then at the profit maximizing prices, the price elasticity of demand is Answer -3 for local skiers -1.4 for out-of-town skiers the same for local skiers and for out-of-town skiers None of the above The Snow City Ski Resort caters to both out-of-town skiers and local skiers. The demand for ski tickets of out-of-town skiers is given by Qo = 600 - 10 Po, while the demand for ski tickets of local skiers is given by Ql = 600 - 20 Pl . The marginal cost of servicing a skier of either type is $10. If Snow City Ski Resort (third-degree) price discriminates then at the profit maximizing prices, the price elasticity of demand is -3 for local skiers -1.4 for out-of-town skiers the same for local skiers and for out-of-town skiers None of the above -3 for local skiers -1.4 for out-of-town skiers the same for local skiers and for out-of-town skiers None of the above

Explanation / Answer

d)None of the above

The local skiers have more elastic demand. The point elasticity for the local-skier market is 5 versus .714 for the out-of-town market.

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