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Suppose the can segment their fans into young fans and senior citizens. Young fans have the...

Suppose the can segment their fans into young fans and senior citizens. Young fans have the demand curve P=120 - 10G (MR=120 - 20G). Senior citizens have the demand curve p=60 - 10G (MR=60 - 20G). Assume again that MC=0. What are the equilibrium price and quantity for young fans? What are the equilibrium price and quantity for senior citizens?

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Answer #1

At equilibrium MR = MC

Young

120 - 20G = 0

G= 6

P= 120 - 10*6= 60

Equilibrium price and quantity for young are 60 and 6 units respectively.

Senior

60 - 20G = 0

G= 3

P= 60 - 10*3 = 30

Equilibrium price and quantity for seniors are 30 and 3 units respectively.

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