1. Third-Degree Price Discrimination (Airports): Suppose Delta discriminates between first-class and business customers. Suppose first-class demand...

Transcribed Image Text:

1. Third-Degree Price Discrimination (Airports): Suppose Delta discriminates between first-class and business customers. Suppose first-class demand is given by QFC = 40 - P and business demand is given by QB = 100 - 5P. Let the total cost function be given by TC(Q) = 2Q +4. a. Find the equilibrium price and quantities. Plot your results. b. Does Delta charge a higher price to first-class or business customers? Justify your answer. 1. Third-Degree Price Discrimination (Airports): Suppose Delta discriminates between first-class and business customers. Suppose first-class demand is given by QFC = 40 - P and business demand is given by QB = 100 - 5P. Let the total cost function be given by TC(Q) = 2Q +4. a. Find the equilibrium price and quantities. Plot your results. b. Does Delta charge a higher price to first-class or business customers? Justify your answer.