5. Price-discriminating monopolistEdison 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 eventattracts scientists and tourists, and Edison 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.Edison's marginal cost of providing admission tickets is zero.(?Market AMarket B2020181816161414Slope: -0.6712121010Slope: -0.67884422MR,MRB PB(+3912151821242730312151821242730QUANTITY (Admission tickets)QUANTITY (Admission tickets)PRICE (Dollars per ticket)PRICE (Dollaper ticket) Suppose that at first, Edison charges the same price of $8 per admission in both markets so that the total number of admissions demanded istickets.Suppose now that Edison decides to charge a different price in each market. To maximize revenue, Edison should charge $per admission inMarket A and $per admission in Market B. At these prices, he will sell a total quantity ofadmission tickets per day.Complete the following table by calculating Edison's total revenue from selling in both markets under the nondiscriminatory as well as thediscriminatory price policy.Total RevenuePricing Policy(Dollars)NondiscriminatoryDiscriminatoryEdison charges a higher price in the market with a relativelyprice elasticity of demand.

In order for a firm to price discriminate, it needs to possess monopoly power in some form.…

Suppose that at first, Edison charges the same price of $8 per admission in both markets so that the total number of admissions demanded is tickets. Suppose now that Edison decides to charge a different price in each market. To maximize revenue, Edison should charge $ per admission in Market A and $ per admission in Market B. At these prices, he will sell a total quantity of admission tickets per day. Complete the following table by calculating Edison's total revenue from selling in both markets under the nondiscriminatory as well as the discriminatory price policy. Total Revenue Pricing Policy (Dollars) Nondiscriminatory Discriminatory Edison charges a higher price in the market with a relatively v price elasticity of demand.

Suppose that at first, Edison charges the same price of $8 per admission in both markets so that the total number of admissions demanded is tickets. Suppose now that Edison decides to charge a different price in each market. To maximize revenue, Edison should charge $ per admission in Market A and $ per admission in Market B. At these prices, he will sell a total quantity of admission tickets per day. Complete the following table by calculating Edison's total revenue from selling in both markets under the nondiscriminatory as well as the discriminatory price policy. Total Revenue Pricing Policy (Dollars) Nondiscriminatory Discriminatory Edison charges a higher price in the market with a relatively v 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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