Problem 2
You are a taxi driver in Astana who stops by a passenger traveling to the airport. This person can be
either a student, a professor or a dean. You know that they are willing to pay up to 400, 900 and 3500
tenge respectively (they agree to take a taxi if the price is equal or less than this amount). You know
also that out of all the people taking taxis 60% are students, 30% are professors and 10% are deans.
When you offer a price and a traveler accepts, you get a job, if not, you lose a client. You are going to
the airport anyway so the cost of the trip for you is 0.
Suppose that you can distinguish each of the three types of travelers, and offer a separate price for
each type. Which price should you offer to each type?
Suppose you cannot distinguish them, and so must offer a single price. What price should you offer to
make the highest possible amount of money (on average)? Show your compu- tations and explain.
Suppose now that 70% of professors look like students and the rest look like deans, while deans and
students are definitely distinguishable. So you can price discriminate only be-tween this two groups.
What should you do to earn the highest possible amount of money? Show your computations and
explain
Answers
Answer:
sorry You are a taxi driver in Astana who stops by a passenger traveling to the airport. This person can be
either a student, a professor or a dean. You know that they are willing to pay up to 400, 900 and 3500
tenge respectively (they agree to take a taxi if the price is equal or less than this amount). You know
also that out of all the people taking taxis 60% are students, 30% are professors and 10% are deans.
When you offer a price and a traveler accepts, you get a job, if not, you lose a client. You are going to
the airport anyway so the cost of the trip for you is 0.
Suppose that you can distinguish each of the three types of travelers, and offer a separate price for
each type. Which price should you offer to each type?
Suppose you cannot distinguish them, and so must offer a single price. What price should you offer to
make the highest possible amount of money (on average)? Show your compu- tations and explain.
Suppose now that 70% of professors look like students and the rest look like deans, while deans and
students are definitely distinguishable. So you can price discriminate only be-tween this two groups.
What should you do to earn the highest possible amount of money? Show your computations and
explain