The impact of charging a discriminating price.

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Chapter 11, Problem 8DQ

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The impact of charging a discriminating price.

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The organisers of a college basketball tournament estimate that the demand for tickets by adults is given by QAD = 2,750 – 50P and that the demand for tickets by students is given by Q ES = 7,750 – 200P. The total cost of organising the tournament is given by C = 10 + 0.01Q², with Q being the number of spectators. a) The directors of the organization of the championship consider that price discrimination can give them a bad image and, therefore, announce a single price for all attendees. Calculate the number of tickets that will allow them to maximise profits and the price of each ticket. Represent graphically. b) In the face of harsh criticism from student associations, the organisers are considering segmenting the market and setting different prices for adults and students. How many tickets will you sell in this case and at what prices? Represent graphically. c) What pricing strategy do you think the organisers will ultimately opt for?