Calculate profit-maximizing price-output and total profit

Reference no: EM13213106

The Do-Drop-Inn, Inc., provides vacation lodging services to both family and senior citizen customers. Yearly demand and marginal revenue relations for overnight lodging services, Q, are as follows: Family PF = $40 - $0.0004QF MRF = $40 - $0.0008QF Senior Citizens PS = $30 - $0.00025QS MRS = $30 - $0.0005QS Marginal cost is constant at $20 per unit. a. Assuming the company can discriminate in price between family and senior citizen customers calculate the profit-maximizing price, output, and total profit contribution levels of senior citizens and families.

Reference no: EM13213106

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