Question

The graph below shows the demand for airline tickets for Discriminating Fliers, which has a monopoly on its direct route from Maine to Scotland.This airline used to charge $450 per customer. But now it charges $300 to customers who buy their tickets at least two weeks in advance and $600 to customers who do not. To ensure that late buyers will get tickets, Discriminating Fliers sets aside 75 tickets for them. Click the areas that represent additional net revenue when the airline price-discriminates.

The graph below shows the demand for airline tickets for Discriminating Fliers, which has a monopoly on its direct route from Maine to Scotland. This airline used to charge $450 per customer. But now it charges $300 to customers who buy their tickets at least two weeks in advance and $600 to customers who do not. To ensure that late buyers will get tickets, Discriminating Fliers sets aside 75 tickets for them. Click the areas that represent additional net revenue when the airline price-discriminates. Click or tap the appropriate places in the image. Price $750 $600+ $450 -- $300 + MC $150 75 150 225 300 Quantity of Customers

Answer 1

Price discrimination: Price discrimination can be defined as charging different prices for the same good and the price differences are not attributable to differences in production or provision cost. Given that the airline used to charge $450 per customer but charges $300 to customers who buy tickets at least two weeks in advance and $600 to customers who do not. In order to ensure that late buyers will get tickets discriminating filers set aside 75 tickets for them. Below is the required graph: Price $750 Net Profit who do not buy tickets before two weeks $600 $450 Net Profit who buy tickets before two weeks $300! $150 MC 75 150 225 300 Quantity of Customers