Air Shangrila sells to both tourist and business travelers on its single route. Tourists always stay over on Saturday nights, while business travelers never do. The weekly demand function of tourists is

QdT=3,000−5P,QTd=3,000−5P,

and the weekly demand function of business travelers is

QdB=4,000−4P.QBd=4,000−4P.

The marginal cost of a ticket is $250.

a. What prices should Air Shangrila set for its tourist ticket and its business ticket?

P_tourist = $.

P_business = $.

b. If the government passes a law that says all tickets must cost the same amount, what price will Air Shangrila set? (Assume Air Shangrila sells to both types of consumers. That is, profit from selling to both types of consumers will be greater than profit without price discrimination where the price is set so high that only one group demands a positive quantity.)

P = $.

c. What would be the elasticities of demand for the two groups at that price?

E^d_tourist =.

E^d_business =.