Demand for the Rangers games can be represented by: Qa 120,000 -120P for adult consumers (MR = = 100 - 1/60 Q) Qs = 80,000-160P for students (MR = 500 - 1/80 Q) Assume, that the capacity of the Madison Square Garden is 50,000. a) If you can distinguish students from the general adult population (by asking for their student ID) and if you want to maximize the profit, what prize would you charge on each market? What is your revenue? b) What are the consumer surpluses in both markets? What are the total DWL on both markets? c) Now imagine, that you can't price discriminate and decide to charge a single price which is just an average of prices from the part a). What is your revenue? d) What are the consumer surpluses in both markets? What are the total DWL on both markets?

Demand for the Rangers games can be represented by: Qa 120,000 -120P for adult consumers (MR = = 100 - 1/60 Q) Qs = 80,000-160P for students (MR = 500 - 1/80 Q) Assume, that the capacity of the Madison Square Garden is 50,000. a) If you can distinguish students from the general adult population (by asking for their student ID) and if you want to maximize the profit, what prize would you charge on each market? What is your revenue? b) What are the consumer surpluses in both markets? What are the total DWL on both markets? c) Now imagine, that you can't price discriminate and decide to charge a single price which is just an average of prices from the part a). What is your revenue? d) What are the consumer surpluses in both markets? What are the total DWL on both markets?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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