# Calculating the profit maximizing price levels

The Yankees have determined that there are three groups of buyers for their tickets. They have determined that the price elasticity of demand for group one is -1.02, for group two is -1.4, and for group three -2.1. The Yankees also know their marginal cost per ticket is $10. The Yankees want to practice price discrimination to maximize their profits. Determine the profit maximizing price that should be charged to each group of buyers

© BrainMass Inc. brainmass.com October 10, 2019, 4:01 am ad1c9bdddfhttps://brainmass.com/economics/price-levels/calculating-profit-maximizing-price-levels-446193

#### Solution Preview

Marginal Cost=MC=$10

Price elasticity of demand for group 1=Ep=-1.02

Optimal Price for group 1= (Ep/(1 + Ep))* MC

...

#### Solution Summary

Solution determines the profit maximizing price that should be charged to each group of buyers in consideration.

$2.19