Please take the time to explain and over explain, I have answers and have been able to come up with solutions but would like to see things mathmatically/clearly
(Pricing for Different Customer Segments)
Masato is the manager of a bus company that serves the Madison-Green Bay route. The demand curve facing each bus is:
Number of Seats = 50 – 0.5*Price
The cost of serving each customer (that is seated) is $10.
If Masato charges a price of $60 per seat, what is the profit for each bus? ($1K)
If the price is $60 per seat, how much is the “Money Left on the Table”? ($400)
If Masato charges 2 prices, $80 (High Price) and $40 (Low Price), what is the profit for each bus? ($1300)
If Masato charges 3 prices, $90 (High Price), $50 and $30 (Low Price), what is the profit for each bus? ($1400)
What is the optimal single price that Masato should charge? ($55)
If Masato can charge 2 prices, what are the optimal two prices he should charge? ($70 and $40)
I may have a question on charging 2 prices, but I fix one price and ask you to solve for the other optimal high (or low) price.
You'll find max capacity of bus to be 50 since if you plug in 0 to the price, you'll get 50 seats.