Amtrak has a monopoly on rail travel in the U.S. It uses price discrimination to offer a discounted price for adults who are currently enrolled students. The marginal cost per train ticket from Baltimore to New York is 100. The demand for regular tickets is P=1000-5Q and the demand for student tickets is P=500-Q. (a) Why would a monopolist like Amtrak offers a discounted price for adult students rather than charging them the same price as other adults?
Amtrak has a monopoly on rail travel in the U.S. It uses price discrimination to offer a discounted price for adults who are currently enrolled students. The marginal cost per train ticket from Baltimore to New York is 100. The demand for regular tickets is P=1000-5Q and the demand for student tickets is P=500-Q. (a) Why would a monopolist like Amtrak offers a discounted price for adult students rather than charging them the same price as other adults?
Chapter25: Monopoly
Section: Chapter Questions
Problem 14E
Related questions
Question
100%
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Step 1: Understanding the Question:
VIEWStep 2: Understanding the Concept of Price Discrimination:
VIEWStep 3: Identifying the Target Market Segment
VIEWStep 4: Analyzing the Demand Elasticity
VIEWStep 5: Understanding Revenue Maximization Through Price Discrimination:
VIEWStep 6: Understand the Benefits of Price Discrimination for Amtrak:
VIEWSolution
VIEWTrending now
This is a popular solution!
Step by step
Solved in 7 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax