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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.

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

Adults:
P = 100 - Q
TR = PQ
TR = (100 - ...

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