Suppose Megabus finds a way to determine if a potential rider is a student or not. They use this information to engage in group price discrimination on their New York to Boston line. The demand curve for non-students is QN = 10,000−100PN and the demand curve for students is QS = 9,000−100PS The marginal cost of allowing another rider on the bus is $5. (There are no supply constraints.) a. If Megabus group price discriminates, what is the price they charge students and non-students for admission tickets? How many tickets do they sell to each group? b. What is Megabus’ profit from price discriminating? c. If Megabus could no longer price discriminate, they would have to set one price for both students and non-students. What demand curve does Megabus face if they cannot price discriminate? What is Megabus’ profit maximizing price and quantity if they cannot price discriminate? d. What is Megabus’ profit from setting one price for both groups? Does Megabus prefer to price discriminate or not? e. Does price discrimination make students better off, worse off, or have no impact on them? How about non-students?
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Suppose Megabus finds a way to determine if a potential rider is a student or not. They use this inf...
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