What kind of price discrimination, Managerial Economics

Assignment Help:

Imagine an amusement park with a sole attraction: a roller coaster. For simplicity, the cost of providing a ride is zero. There is a single consumer with demand for rides on the roller coaster given by P(Q)=1 - Q. Let the park not only charge a price p per ride but also an access fee F at the entrance.

(a) What is the pro?t maximising combination of p and F? Illustrate graphically. [Hint: ?rst, for a given price per ride p, how much is the consumer willing to pay to access the roller coaster - you know a measure for that, and this will be the optimal ?xed fee for any given p,say F(p). Looking at the corresponding pro?ts, you will see what the optimal p is.]

(b) What kind of price discrimination is this (?rst, second or third degree)?

(c) Is there still an ineffciency?

(d) Do your answers change if there are instead many, say e. g. 100, identical consumers with the given demand?


Related Discussions:- What kind of price discrimination

Long run equilibrium of a firm under perfect competition, In the long run, ...

In the long run, because of the assumption of free entry and exit of the firms, it's not possible for the firms to make super-normal profits nor it is possible for them to incur lo

Central bank functions-goverment banker and fiscal agent, Goverment Banker,...

Goverment Banker, Fiscal Agent and Adviser Central banks in all countries acts as the fiscal agent, banker and adviser on all important financial matters to government of thei

Determine the scope of managerial economics, Determine The scope of manager...

Determine The scope of managerial economics The scope of managerial economics involves following subjects: 1.  Theory of demand 2.  Theory of production 3.  Theory of

Managerial economic, gap between economic theory and business practice

gap between economic theory and business practice

Waste in imperfect competition, WASTE IN IMPERFECT COMPETITION Monopol...

WASTE IN IMPERFECT COMPETITION Monopolistic competition involves some degree of waste in two aspects. When new firms enter the industry and the demand for the individual fi

What is lerner’s index, Antitrust authorities at the Federal Trade Commissi...

Antitrust authorities at the Federal Trade Commission are reviewing your company's recent merger with a rival firm. The FTC is concerned that the merger of two rival firms in the s

Progressive tax, PROGRESSIVE TAX A progressive income tax system is on...

PROGRESSIVE TAX A progressive income tax system is one where the higher the income, the greater the proportion paid in taxes.  This is effected by dividing the taxpayers' inco

Characteristics of money, Characteristics of Money Over time, therefor...

Characteristics of Money Over time, therefore, it became clear that for an item to act as money it must possess the following characteristics. Acceptability If

Limitations, limitations of managerial ecomomics

limitations of managerial ecomomics

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd