The Catawba River City Park Has a Low Demand D₁

Essay

The Catawba River City Park has a low demand D₁ during work days, but on Saturday and Sunday demand increases to D₂ on Saturday and Sunday. The demand and marginal revenue functions are:
D₁ = P₁ = 2 - 0.001Q₁
MR₁ = 2 - 0.002Q₁
D₂ = P₂ = 20 - 0.01Q₂
MR₂ = 20 - 0.01Q₂
where Q = number of cars entering the park each day. The marginal cost of operating the park is the same on weekdays and weekends:
MC = 1 + 0.004Q.
a. In order to control crowds, the park's management uses peak-load pricing. This scheme controls crowds and makes sure the park is self-supporting. Calculate the appropriate prices to charge, and determine the number of cars entering the park, Q₁ and Q₂.
b. Explain how switching from a uniform pricing scheme to a peak load pricing scheme affects the market.