Question

Gianluca spends his evenings working as an exotic dancer in a hotel bar near Pearson Airport. Jodie and Sabrina went to see him one night. They say his act is spectacular! Gianluca’s cost of providing services is given by C = Q^2+ 400. Out-of-town businesswomen have demand for his services given by Q1= 120 − 0.5P. Local Brampton cougars have demand given by Q2= 80 − 0.5P. Gianluca has figured out how to apply the theory of ordinary Price Discrimination to his dancing career.

a.Calculate and illustrate his OPD profits π = __________.

b.Calculate and illustrate the OPD efficiency loss = __________.

c.Provide a set of fully labeled diagrams. Quantify all intercepts, intersections, and tangencies.

Answer 1