The Lyndon B. Johnson Space Center (JSC) named in honor of the late President, is responsible for the design, development, and operation of human space flight is a leading science and space exploration learning center. The center features more than 400 space artifacts, permanent and traveling exhibits, exhibits and experiences and theaters related to the exciting future and remarkable past of America’s human space-flight program – all for one admission price. The experience is designed to engage adults and children alike. There is always something new at Space Center Houston with an amazing array of traveling exhibits and astounding events. Space Center Houston has the world’s largest collection of moon rocks and lunar samples for public view. Known around the world as the home of NASA Mission Control, International Space Station Mission Control and astronaut training, guests are taken behind the scenes to see NASA Johnson Space Center. The Smithsonian Museum is affiliated to the space center. As the Marketing Director of the space center which offers a one-of-a-kind experience, you are faced with the twin goals of promoting interest among students without reduction in the total revenue of the center. The marginal cost of running the Center is only a nominal $2. Most of the cost of maintaining the center is fixed cost. Given this background, the following are your options for admission ticket pricing: Charge students differently from general public Set a profit maximizing price Price a combo ticket (Space center + Museum) less than the sum of individual ticket prices. No discount for students. Given below are the demand schedule of the two groups (General public and Students) and the market demand. Answer the following questions based on the information given. Q)Does charging a uniform price increase the profits of the space center as compared to strategy 1? Explain. What role does elasticity of demand play in achieving the profits that you calculated? Table 1: Demand schedule for space center tickets– General public Price of the ticket Quantity demanded of tickets – General Public (Dg) Marginal Revenue MRg 0 1600 -$16.0 8 800 $0.0 9 700 $2.0 10 600 $4.0 11 500 $6.0 12 400 $8.0 13 300 $10.0 14 200 $12.0 15 100 $14.0 16 0 $16.0 Table 2: Demand schedule for space center tickets – Students Price Quantity demanded of tickets - Student (Ds) Marginal Revenue - MRs $0 1000 -$10.0 $5 500 $0.00 $6 400 $2.00 $7 300 $4.00 $8 200 $6.00 $9 100 $8.00 $10 0 $10.00 Table 3: Demand schedule for space center tickets – Total Price Quantity demanded MR Total cost 0 2600 -$13.00 5700 3.5 1900 -$6.00 4300 4.5 1700 -$4.00 3900 5.5 1500 -$2.00 3500 6.5 1300 $0.00 3100 7.5 1100 $2.00 2700 8.5 900 $4.00 2300

The Lyndon B. Johnson Space Center (JSC) named in honor of the late President, is responsible for the design, development, and operation of human space flight is a leading science and space exploration learning center. The center features more than 400 space artifacts, permanent and traveling exhibits, exhibits and experiences and theaters related to the exciting future and remarkable past of America’s human space-flight program – all for one admission price. The experience is designed to engage adults and children alike. There is always something new at Space Center Houston with an amazing array of traveling exhibits and astounding events. Space Center Houston has the world’s largest collection of moon rocks and lunar samples for public view. Known around the world as the home of NASA Mission Control, International Space Station Mission Control and astronaut training, guests are taken behind the scenes to see NASA Johnson Space Center. The Smithsonian Museum is affiliated to the space center. As the Marketing Director of the space center which offers a one-of-a-kind experience, you are faced with the twin goals of promoting interest among students without reduction in the total revenue of the center. The marginal cost of running the Center is only a nominal $2. Most of the cost of maintaining the center is fixed cost. Given this background, the following are your options for admission ticket pricing: Charge students differently from general public Set a profit maximizing price Price a combo ticket (Space center + Museum) less than the sum of individual ticket prices. No discount for students. Given below are the demand schedule of the two groups (General public and Students) and the market demand. Answer the following questions based on the information given. Q)Does charging a uniform price increase the profits of the space center as compared to strategy 1? Explain. What role does elasticity of demand play in achieving the profits that you calculated? Table 1: Demand schedule for space center tickets– General public Price of the ticket Quantity demanded of tickets – General Public (Dg) Marginal Revenue MRg 0 1600 -$16.0 8 800 $0.0 9 700 $2.0 10 600 $4.0 11 500 $6.0 12 400 $8.0 13 300 $10.0 14 200 $12.0 15 100 $14.0 16 0 $16.0 Table 2: Demand schedule for space center tickets – Students Price Quantity demanded of tickets - Student (Ds) Marginal Revenue - MRs $0 1000 -$10.0 $5 500 $0.00 $6 400 $2.00 $7 300 $4.00 $8 200 $6.00 $9 100 $8.00 $10 0 $10.00 Table 3: Demand schedule for space center tickets – Total Price Quantity demanded MR Total cost 0 2600 -$13.00 5700 3.5 1900 -$6.00 4300 4.5 1700 -$4.00 3900 5.5 1500 -$2.00 3500 6.5 1300 $0.00 3100 7.5 1100 $2.00 2700 8.5 900 $4.00 2300

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The Lyndon B. Johnson Space Center (JSC) named in honor of the late President, is responsible for the design, development, and operation of human space flight is a leading science and space exploration learning center. The center features more than 400 space artifacts, permanent and traveling exhibits, exhibits and experiences and theaters related to the exciting future and remarkable past of America’s human space-flight program – all for one admission price. The experience is designed to engage adults and children alike. There is always something new at Space Center Houston with an amazing array of traveling exhibits and astounding events. Space Center Houston has the world’s largest collection of moon rocks and lunar samples for public view. Known around the world as the home of NASA Mission Control, International Space Station Mission Control and astronaut training, guests are taken behind the scenes to see NASA Johnson Space Center. The Smithsonian Museum is affiliated to the space center. As the Marketing Director of the space center which offers a one-of-a-kind experience, you are faced with the twin goals of promoting interest among students without reduction in the total revenue of the center. The marginal cost of running the Center is only a nominal $2. Most of the cost of maintaining the center is fixed cost. Given this background, the following are your options for admission ticket pricing:
Charge students differently from general public
Set a profit maximizing price
Price a combo ticket (Space center + Museum) less than the sum of individual ticket prices. No discount for students.

Given below are the demand schedule of the two groups (General public and Students) and the market demand. Answer the following questions based on the information given.

Q)Does charging a uniform price increase the profits of the space center as compared to strategy 1? Explain. What role does elasticity of demand play in achieving the profits that you calculated?

Table 1: Demand schedule for space center tickets– General public

Price of the ticket	Quantity demanded of tickets – General Public (Dg)	Marginal Revenue MRg
0	1600	-$16.0
8	800	$0.0
9	700	$2.0
10	600	$4.0
11	500	$6.0
12	400	$8.0
13	300	$10.0
14	200	$12.0
15	100	$14.0
16	0	$16.0

Table 2: Demand schedule for space center tickets – Students

Price	Quantity demanded of tickets - Student (Ds)	Marginal Revenue - MRs
$0	1000	-$10.0
$5	500	$0.00
$6	400	$2.00
$7	300	$4.00
$8	200	$6.00
$9	100	$8.00
$10	0	$10.00

Table 3: Demand schedule for space center tickets – Total

Price	Quantity demanded	MR	Total cost
0	2600	-$13.00	5700
3.5	1900	-$6.00	4300
4.5	1700	-$4.00	3900
5.5	1500	-$2.00	3500
6.5	1300	$0.00	3100
7.5	1100	$2.00	2700
8.5	900	$4.00	2300

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