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Price Discrimination at the Golf Course: Adults and Seniors

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Pa = 100 - Qa for regular adults and Ps = 50 - 0.5Qs for seniors. Suppose the marginal cost of a round of golf is the same regardless of the age of the player, and MC = 10.

a. How much should the course charge regular adults, and how much should it charge seniors.?

b. This is an example of which type of price discrimination & why?

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Solution Summary

This solution shows how a golf course can use price discrimination between adults and seniors to maximize its profits.

Solution Preview

a) The golf course maximizes its profit by setting its prices such that Marginal Revenue (MR) = MC for each group.

P = 100 - Q
TR = (100 - ...

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