Lucia owns a plot of land in the desert that isn't worth much. One day, a giant meteorite falls on her property, making a large crater. The event attracts scientists and tourists, and Lucia decides to sell nontransferable admission tickets to the meteor crater to both types of visitors: scientists (Market A) and tourists (Market B). The following graphs show daily demand (D) curves and marginal revenue (MR) curves for the two markets. Lucia’s marginal cost of providing admission tickets is zero. Suppose that at first, Lucia charges the same price of $4 per admission in both markets so that the total number of admissions demanded is__tickets. Suppose now that Lucia decides to charge a different price in each market. To maximize revenue, Lucia should charge_per admission in Market A andper admission in Market B. At these prices, she will sell a total quantity of _admission tickets per day. Complete the following table by calculating Lucia's total revenue from selling in both markets under the nondiscriminatory as well as the discriminatory price policy. Pricing Policy Total Revenue (Dollars) Nondiscriminatory Discriminatory Lucia charges a lower price in the market with a relatively _____ price elasticity of demand.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Lucia owns a plot of land in the desert that isn't worth much. One day, a giant meteorite falls on her property, making a large crater. The event attracts scientists and tourists, and Lucia decides to sell nontransferable admission tickets to the meteor crater to both types of visitors: scientists (Market A) and tourists (Market B). The following graphs show daily demand (D) curves and marginal revenue (MR) curves for the two markets. Lucia’s marginal cost of providing admission tickets is zero.

Suppose that at first, Lucia charges the same price of $4 per admission in both markets so that the total number of admissions demanded is______tickets.

Suppose now that Lucia decides to charge a different price in each market. To maximize revenue, Lucia should charge_________per admission in Market A and________per admission in Market B. At these prices, she will sell a total quantity of _________admission tickets per day.

Complete the following table by calculating Lucia's total revenue from selling in both markets under the nondiscriminatory as well as the discriminatory price policy.

Pricing Policy	Total Revenue
(Dollars)
Nondiscriminatory
Discriminatory

Lucia charges a lower price in the market with a relatively _________ price elasticity of demand.

Lucia owns a plot of land in the desert that isn't worth much. One day, a giant meteorite falls on her property, making a large crater. The event
attracts scientists and tourists, and Lucia decides to sell nontransferable admission tickets to the meteor crater to both types of visitors: scientists
(Market A) and tourists (Market B). The following graphs show daily demand (D) curves and marginal revenue (MR) curves for the two markets.
Lucia's marginal cost of providing admission tickets is zero.
PRICE (Dollars per ticket)
10
9
7
m
1
0
+
0
+
2
Market A
MR
+
+
4 6 8 10 12 14 16
QUANTITY (Admission tickets)
D
A
18 20
(?)
PRICE (Dollars per ticket)
10
9
1
0
+
0
+
2
Market B
MR Pa
6 8 10 12 14 16
QUANTITY (Admission tickets)
18 20
(?)

Suppose that at first, Lucia charges the same price of $4 per admission in both markets so that the total number of admissions demanded is
tickets.
Suppose now that Lucia decides to charge a different price in each market. To maximize revenue, Lucia should charge $
Market A and
per admission in Market B. At these prices, she will sell a total quantity of
Complete the following table by calculating Lucia's total revenue from selling in both markets under the nondiscriminatory as well as the discriminatory
price policy.
Pricing Policy
Nondiscriminatory
Discriminatory
Total Revenue
(Dollars)
Lucia charges a lower price in the market with a relatively
per admission in
admission tickets per day.
price elasticity of demand.

Expert Solution

Step 1

Given:-

Lucia marginal cost=0

Lucia charges price=$4

No. of market=2 i.e Market A and Market B

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