(Table: Maximum Willingness to Pay IV) Suppose that the marginal cost of a one-way airfare is $30.
a. If the airline practices perfect price discrimination, how many customers will purchase one-way airfare? How much producer surplus is earned from perfect price discrimination?
b. Suppose the airline cannot price-discriminate and must sell airfare at a single price. What price does the airline charge per ticket? How many tickets are sold at this price? How much producer surplus is earned?

Question

(Table: Maximum Willingness to Pay IV) Suppose that the marginal cost of a one-way airfare is $30.  
a. If the airline practices perfect price discrimination, how many customers will purchase one-way airfare? How much producer surplus is earned from perfect price discrimination?
b. Suppose the airline cannot price-discriminate and must sell airfare at a single price. What price does the airline charge per ticket? How many tickets are sold at this price? How much producer surplus is earned?

Quizplus · Accepted Answer

The Answer of (Table: Maximum Willingness to Pay IV) Suppose that the marginal cost of a one-way airfare is $30.  
a. If the airline practices perfect price discrimination, how many customers will purchase one-way airfare? How much producer surplus is earned from perfect price discrimination?
b. Suppose the airline cannot price-discriminate and must sell airfare at a single price. What price does the airline charge per ticket? How many tickets are sold at this price? How much producer surplus is earned?

(Table: Maximum Willingness to Pay IV) Suppose That the Marginal