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QUESTION

# The demand for the services provided by the Tikho Marina in Novorossiysk is Q = 100 − 2P and the marginal cost of providing these services is MC = −110 + 2Q, where Q is the number of yachts in the mar

1. The demand for the services provided by the Tikho Marina in Novorossiysk is Q = 100 − 2P and the marginal cost of providing these services is MC = −110 + 2Q, where Q is the number of yachts in the marina. Assume that all yachts require the same services. If a two-part tariff pricing system is used,
• what is the optimal daily entry fee for the marina?
• how many yachts will visit the Tikho Marina?

2. The per-week (inverse) demand for use of the Øresund Bridge between Denmark and Sweden is P = 13 − 0.15Q during peak traffic periods and P = 10 − 0.1Q during off-peak hours, where Q is the number of cars crossing the bridge in thousands and P is the toll in euros. If the marginal cost of using the bridge is MC = 5 + 0.2Q, what are the optimal peak load toll and off-peak load toll for crossing the bridge?

3. RayChopper is a new brand of helicopters. As a test, the manufacturer makes them available for sightseen flights only on the islands of Rhodes and Mykonos to luxury customers, such as football players and celebrities. The weekly quantities demanded of the RayChopper sightseeing flights in the two locations are given by QR = 100 − 2PR and QM = 100 – PG. ADS is the sole provider of helicopter tourist flights on the islands and can offer the flights at TC = 10(QR + QM) using one pilot and a booking office based in Athens. Assume for simplicity that all prices and costs are given in EUR and that the RayChoppers cannot be moved across islands.

• If ADS price discriminates between the locations, what price will it charge in Rhodes and Mykonos?
• What are ADS maximized profits?