Essay
Between Ottawa and Toronto Island, Porter Air has a monopoly in two markets, one for students who are willing to fly on a standby basis, and one for business people who are not. The marginal cost of a seat on a plane that is not filled to capacity is zero. The demand function of all students combined is QS = 500 - 25PS and the demand function of all non- students combined is QN = 4000 - 10PN. If the airline can engage in ordinary price discrimination and its planes are not filled to capacity, find:
a)The price to students.
b)The price to non- students.
c)The deadweight loss in the market.
d)Suppose price discrimination between students and non- students is illegal. What is the deadweight loss in the market?
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a)10; b)20...View Answer
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