Question

The graph on the left shows a market in which a monopolist airline does not price-discriminate and charges $300 per ticket. This generates a net revenue of $20,000. The graph on the right shows a market in which the monopolist price-discriminates and charges $200 to customers who buy their tickets at least two weeks in advance, and $400 to customers who do not. This generates a net revenue of $25,000.How much net revenue would this airline generate if it were able to practice perfect price discrimination?

The graph on the left shows a market in which a monopolist airline does not price-discriminate and charges $300 per ticket. This generates a net revenue of $20,000. The graph on the right shows a market in which the monopolist price-discriminates and charges $200 to customers who buy their tickets at least two weeks in advance, and $400 to customers who do not. This generates a net revenue of $25,000. How much net revenue would this airline generate if it were able to practice perfect price discrimination? Price Price $500 Additional revenue from charging $400 $400 Revenue lost by not charging $300 +$5,000 $300 $300 Additional revenue from charging $200 $5,000 -$5,000 $20,000 $200 $5,000 $5,000 +$5,000 MC $100 $100 MA 100 50 100 150 Quantity of Customers 200 Quantity of Customers Click or tap the numbers or use your keyboard to type. If you're not sure, just take a guess. 0 1 2 3 4 5 6 7 8 9 + Done Done

Answer 1

It would be the entire consumer surplus at a price of $100

This is computed as. 0.5*(500-100)*200 = $40000

because then each and every consumer will be charged his or her reservation prices, the net revenue will be maximum and will be equal to their consumer surplus