|Question||The university museum has two types of visitors. One type is university employees; and the other type is people nonaffiliated with the university. All university employees have identical annual demands for museum visits, given by
PP = 30 – QP ( for each university employee)
where QP is the number of visits demanded if the price is PP per visit. Nonaffiliated people all have identical annual demands for museum visits, but differ from university employees: PN = 100 = QN ( for each nonaffiliated person)
where QN is the number of visits demanded if the price is PN per visit. The museum can identify university employees by their university ID card, while a nonaffiliated person does not possess a university ID. The university’s profit- maximizing museum is contemplating two different pricing policies:
• For university employees: An annual membership fee and an additional price-per-visit. (Only university employees are eligible for this membership plan.)
• For nonaffiliated visitors: A single price- per- visit, with no membership fee. (This price per visit is not necessarily the same as the university employee price per visit.)
• This policy would offer a different price-per-visit for each type of visitor, but no membership fees at all.
The museum has a constant marginal cost of $6 per visit, regardless of the visitor’s type. For simplicity, assume that there is one university employee and one nonaffiliated person in the target population.
How much more profit does the best policy yield than the other policy?