Question 11 refer to the scenario that follows. An amusement park, whose customer set is made up of two markets, adult and children, has developed demand schedules as follows:
Price ($)
|
Quantity, Adults
|
Quantity, Children
|
|
5
|
15
|
20
|
|
6
|
14
|
18
|
|
7
|
13
|
16
|
|
8
|
12
|
14
|
|
9
|
11
|
12
|
|
10
|
10
|
10
|
|
11
|
9
|
8
|
|
12
|
8
|
6
|
|
13
|
7
|
4
|
|
14
|
6
|
2
|
The marginal operating cost of each unit of quantity is $5. (Hint: Because marginal cost is a constant, so is average variable cost. Ignore fixed cost.) The owners of the amusement park want to maximize profits.
Calculate the price, quantity, and profit for each segment if the amusement park charges a different price in each market. (Hint: calculate profit at each price in the adult market, then in the child market, and choose profit maximizing in each. Using a spreadsheet would make this task manageable.)
Adult market price (in dollars): [a]
Adult market quantity: [b]
Adult market profit (in dollars): [c]
Child market price (in dollars): [d]
Child market quantity: [e]
Child market profit (in dollars): [f]
Total profit (adult + child, in dollars): [g]