Question

Lucia owns a plot of land in the desert that isn't worth much. One day, a giant meteorite falls on her property, making a large crater. The event attracts scientists and tourists, and Lucia 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 (DD) curves and marginal revenue (MRMR) curves for the two markets. Lucia's marginal cost of providing admission tickets is zero.

Market A Market B PRICE (Dollars per ticket) PRICE (Dollars per ticket) HHH O MR. 0 HHHHH AHHH 0 4 8 12 16 20 24 28 32 36 QUANTITY (Admission tickets) + 0 + 4 40 MRBPBHH + 8 12 16 20 24 28 32 QUANTITY (Admission tickets) 36 40 Suppose now that Lucia decides to charge a different price in each market. To maximize revenue, Lucia should charge per admission in Market A and per admission in Market B. At these prices, she will sell a total quantity of admission tickets per day.

Answer 1

$5; $3; 32
(She will maximize her profit in each market by selling at the point where MR = MC.
MC = 0. So, MR = 0 gives, QA = 20 and PA = $5, in market B, QB = 12; PB = $3. Total quantity = 20+12 = 32)

Total revenue = 136
(5*20 + 3*12 = 100 + 36 = 136)

less
(Higher price is charged where elasticity is less.)