Question

If you're like some college students, you are always worried about having enough money. Suppose that you decide to become an Uber driver, and you offer rides to students on weekends. For a fee, you will drive them to parties and pick them up at the end of the night. Your marginal cost per ride is $10. To keep things simple, assume you are the only person in your town providing this service that is, you're a monopolist. On any given weekend, there are six customers who want a ride-three men and three women. The table below shows the most each person is willing to pay for a ride. 

Part 1 (1 point) 

If you could charge only a single price, you would earn $ in profit 

Part 2 (1 point) 

Suppose you could charge men and women different prices. The tables below show each group's demand 

Part 3 (1 point) 

How much profit would you earn if you practiced perfect price discrimination?

Answer 1

1.

If you could charge only single price you ear _________ in profit.

Ans:$120

Explanation : here if we charge single price then we have to sell, where we can earn maximum.

If I sell one unit I only able to earn is $70 because only one person will buy. Same if I will sell it at 60 two person will buy so earning will be 120.and if I sell it at 50, then 3 person will buy then amount will be 50*3=150.

Same...at 40 it will be 40*4=160, at 30 it will be 30*5=150.

So here we can earn maximum by selling quantity at $40.

Profit =total revenue - total cost

=160-(10*4)

=160-40

=120.

2.if you charge men one price and women one price?

Ans: $140.

Explanation :

If I charge man and woman differently than,

Man:

If i sell at 70,then I only able to make 70.

If I sell at 50 I can make 50*2=100.

If I sell at 30 then 30.*3=90.

So I will sell man at 50.

Women:

If I sell at 60 I get only 60.

If I sell at 40 than it will be 40*2=80.

If I sell it at 20 then 20*3=60.

So I will sell it at 40.

Now total earning from man and women will be 100+80=180.

Now profit=total revenue - total cost

=180-(10*4)

=140.

3. How much profit would you earn when its perfect price discrimination.

Ans: $210(profit)

Explanation :

In perfect price discrimination, we can charge different prices from the different costumers so here if we charge different prices from different costumers we can get total revenue =70+60+50+40+30+20 =270.

And the total cost is = 10*6 =60

So total profit =270-60=210.