The Snow City Ski Resort cater to both out of town and local skiers. The demand for each market segment as well as the combined market is given in the attached table. The marginal cost servicing either type of skier is constant at $10. There are no fixed costs.
a. If the resort charges one price to all skiers, what price would it charge? What would be its total revenues and total profits.
b. Which market segment are most price elastic at that price?
c. If the resort decides to offer different prices to each market segment, what prices would maximize profits? What would be the total # of skiers, the total revenues and total profits?
d. What techniques might the resort use to implement such a pricing policy?
e. What must the resort guard against if the pricing is to work effectively?
Pricing at Snow City Ski Resort is analyzed.