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# Uniform pricing and market power

Wet-n-Wild Indoor Water Park offers family fun year-round in the Northstar state to locals and out-of-state visitors to the nearby Mall of America. The demand for day-passes to the water park for each market segment is independent of the other market segment. The marginal cost of providing service to each visitor is \$5 per day. Suppose the daily demand curves for the two market segments are:

Locals - QL=3000-200P or P=15-0.005*QL
Out of towners - QO = 3000-100P or P=30-0.01*QO

(a.) If Wet-n-Wild Indoor Water Park charges one price to all visitors, what is the profit maximizing price? How many day-passes will be sold per day?
(b.) If Wet-n-Wild Indoor Water Park charges one price to locals, what is the profit maximizing price for locals? How many day-passes will be sold per day to locals?
(c.) If Wet-n-Wild Indoor Water Park charges one price to out-of-towners, what is the profit maximizing price for out-of-town guests? How many day-passes will be sold per day to out-of-town guests?
(d.) Compare the prices from uniform pricing to the prices from price discrimination.

#### Solution Summary

This solution clearly compares the prices from uniform pricing to the prices from price discrimination.

\$2.19