4. Consider the table below, which shows seven potential customers who are interested in taking a...

  

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4. Consider the table below, which shows seven potential customers who are interested in taking a 30-minute helicopter ride. The helicopter company is a profit-maximizing monopolist. The helicopter has room for eight people, including the pilot. The marginal cost for any passenger is $10. Assume there are no fixed costs. (40 points) Customer Maximum Willingness to Pay Age Amelia $90 $80 $20 66 Orville 34 Wilbur 17 Neil Charles $40 $50 $100 $10 16 14 Chuck Buzz 49 15 a. (20 pts.) Using marginal analysis, if the helicopter company can only charge one price, what should it be? Support your answer. (Hint: create a market demand schedule by ranking the customers from those willing to pay the most, to those willing to pay the least; and remember the helicopter company wants to maximize its profit.) b. (20 pts.) Suppose the helicopter company could charge two prices: one for passengers age 18 and older, and one for persons aged 13 through 17. What price should they charge each group? Support your answer. 4. Consider the table below, which shows seven potential customers who are interested in taking a 30-minute helicopter ride. The helicopter company is a profit-maximizing monopolist. The helicopter has room for eight people, including the pilot. The marginal cost for any passenger is $10. Assume there are no fixed costs. (40 points) Customer Maximum Willingness to Pay Age Amelia $90 $80 $20 66 Orville 34 Wilbur 17 Neil Charles $40 $50 $100 $10 16 14 Chuck Buzz 49 15 a. (20 pts.) Using marginal analysis, if the helicopter company can only charge one price, what should it be? Support your answer. (Hint: create a market demand schedule by ranking the customers from those willing to pay the most, to those willing to pay the least; and remember the helicopter company wants to maximize its profit.) b. (20 pts.) Suppose the helicopter company could charge two prices: one for passengers age 18 and older, and one for persons aged 13 through 17. What price should they charge each group? Support your answer.

Answer rating: 100% (QA)

a For 80 price level only 2 customers will be ready to pay as their maximum willingness to pay is 80 or above Total revenue of monopolist 80 2 160 For ... View the full answer