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Point price elasticity of demand for tourist customers

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Price Discrimination for The Fun Land Amusement Park:

See attachment for information and equations.

a) Assuming the company can discriminate in pricing between locals and tourist customers through coupons distributed to locals via local shops, calculate the profit maximizing price, output, and total profit contribution levels.

b) Calculate point price elasticities of demand for each customer class at the activity levels identified in part A. Are the differences in these elasticities consistent with your recommended price differential? Explain.

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Solution Summary

Point price elasticity of demand for tourist customers is depicted.