Answer Happy

5. Price-discriminating monopolist Kevin owns a plot of land in the desert that isn't worth much. One day, a giant meteorite falls on his property, making a large crater. The event attracts scientists and tourists, and Kevin decides to sell nontransferable admission tickets to the meteor crater to both types of visitors: scientists (Market A) and tourists (Market B). The following graphs show daily demand (D) curves and marginal revenue (MR) curves for the two markets. Kevin's marginal cost of providing admission tickets is zero. PRICE (Dollars per ticket) 20 18 16 14 12 10 0 0 3 Market A ‒‒‒‒‒‒ 15, 0 MR 6 9 12 15 18 21 24 QUANTITY (Admission tickets) DA 27 30 ? PRICE (Dollars per ticket) 20 18 16 14 12 0 Market B MRB PB 9 12 15 18 21 24 27 30 QUANTITY (Admission tickets) 6 (?)
Suppose that at first, Kevin charges the same price of $8 per admission in both markets so that the total number of admissions demanded is tickets. Suppose now that Kevin decides to charge a different price in each market. To maximize revenue, Kevin should charge $ Market A and $ per admission in Market B. At these prices, he will sell a total quantity of admission tickets per day. Complete the following table by calculating Kevin's total revenue from selling in both markets under the nondiscriminatory as well as the discriminatory price policy. Pricing Policy Nondiscriminatory Discriminatory Total Revenue (Dollars) Kevin charges a higher price in the market with a relatively low high per admission in price elasticity of demand.