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Optimal season ticket packages set by the ravens

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Problem 1: Price Discrimination. The Baltimore Ravens are choosing ticket prices. They know that there are two types of fans: super and casual. Super fans have an inverse demand Ps = 60 - Qs and casual fans have an inverse demand Pc = 30 - 1/2Qc. The marginal cost of ticket production is MC = 10.

1. Suppose that the Ravens can perfectly distinguish between super fans and casual fans (by testing their knowledge of Ravens history).

a) What price per ticket and quantity will the Ravens choose for super fans? For casual fans?

b) What are the Ravens profits?

2. Suppose instead that the Ravens can't distinguish between super fans and casual fans.

a) Find the market (inverse) demand curve. What single price per ticket and quan- tity will the Ravens choose?

b) What are the Ravens profits?

3. The Ravens still cannot distinguish between super fans and casual fans. Instead of selling single-game tickets, the Ravens want to create two season ticket packages: one aimed at super fans and one aimed at casual fans. (Assume now that the demand curves given in the problem are for a representative consumer of each type.)

a) What are the optimal season ticket packages (menu pricing) set by the Ravens?

b) What is the consumer surplus of casual fans? Of super fans? From which fan type do the Ravens make higher profits?

Reference no: EM132649375

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