Please answer just part B please 4 Table 1011 Customer Maxim

Please answer just part B please

4. Table 10.11 Customer Maximum Willingness to Pay (one-way airfare) $150 Martin Adam $130 Tina 110 Tita $90 Kylee $70 Kyler $30 Reference: Ref 10-22 (Table 10.11) Suppose that the marginal cost of a one-way airfare is $30. a. If the airline practices perfect price discrimination, how many customers will purchase one way airfare? How much producer surplus is earned from perfect price discrimination? b. Suppose the airline cannot price-discriminate and must sell airfare at a single price. What price does the airline charge per ticket? How many tickets are sold at this price? How much producer surplus is earned?

Solution

b.) Without price discrimintion , firm charges 30$ per ticket where MC=Maximum willingness to pay.

So 6 tickets will be sold at this price because all will purchase it.

Producer surplus=0 because P=MC