The Accompanying Table Summarizes Information About Each Potential Passenger's Age

question 108

Multiple Choice

The accompanying table summarizes information about each potential passenger's age and his or her maximum willingness to pay for a solo skydiving experience from SkyMasters, Inc. The aircraft has room for eight people, including the pilot and skydiving instructor. The marginal cost of adding each additional passenger is $100. SkyMasters, Inc. holds significant market power for its region. Use this information to answer the questions. $\begin{array}{lll}&\text { Maximum }\\\text { Customer }&\text { Willingness to Pay }&\text { Age }\\\text { Harold } & \$ 400 & 50 \\\text { Jay } & \$ 300 & 45 \\\text { Leslie } & \$ 350 & 42 \\\text { Kristen } & \$ 250 & 21 \\\text { Ivana } & \$ 200 & 20 \\\text { Matt } & \$ 150 & 18\end{array}$
-SkyMasters, Inc. has decided to charge two different prices, a high price and low price, based on age. Calculate the increase in total revenue the company gains from its practice of price discrimination versus what it would earn if it charged a single price to all customers.

• A) $1,300
• B) $1,200
• C) $650
• D) $300
• E) $100