Why do the airlines charge less for passengers who stay over Saturday night and purchase their tickets two weeks in advance?
The airlines are practicing a form of price discrimination. They know the demand for leisure travel is much more elastic than the demand for business travel. Since leisure travelers plan in advance and usually have the option of staying over a Saturday night, they benefit from lower prices. Business travelers generally cannot choose either option. The airlines are attempting to maximize profit in each of these segmented markets. Leisure travelers gain both lower prices and more travel; business travelers pay more, but may gain from added flights due to the added leisure travel.
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Kate and Alice are small-town ready-mix concrete duopolists. The market demand function is Qd = 20,000 - 200P where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $80 per cubic yard. Suppose Kate enters the market first and chooses her output before Alice. Given market demand, what is the market price per cubic yard?
A. $80 B. $85 C. $90 D. $95
Winner-take-all labor markets are commonly found in
a. sports and entertainment industries b. unionized industries c. the government sector d. the legal services industry e. service industries in general
Compared to 1929, total output per person in the U.S. today is approximately ________ times larger.
A. 15 B. 2 C. 25 D. 5
Refer to the above figure. A price ceiling of $20 results in
A) a shortage of 100 units. B) a shortage of 200 units. C) a surplus of 100 units. D) a surplus of 200 units.