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Question 3: A hotel serves both business and vacation travelers and wishes to price-discriminate. The hotel...

Question 3: A hotel serves both business and vacation travelers and wishes to price-discriminate. The hotel managers can accurately identify and separate submarkets. The hotel faces the following cost :

MC = AC = 20

Demand by business travelers: Qb = 400 -5Pb

Demand by vacationer: Qv = 400 -10 Pv

3.1. Derive MR for this firm

3.2. What is the profit-maximizing number of business travelers to serve? Vacationers?

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