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What is the consumer surplus of casual fans

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Reference no: EM132649332

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 inversedemandPs= 60-Qsand casual fans have an inverse demandPc= 30-1/2Qc. The marginalcost of ticket production isMC= 10.

1. Suppose that the Ravenscan perfectly distinguishbetween 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? Forcasual fans?

b) What are the Ravens profits?

2. Suppose instead that the Ravenscan't distinguishbetween 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 ofselling single-game tickets, the Ravens want to create two season ticket packages: oneaimed at super fans and one aimed at casual fans. (Assume now that the demandcurves 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 fantype do the Ravens make higher profits?

Reference no: EM132649332

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