Great Gorge Amusement Park is a 40-acre fun park full of rides, shows, and shops. Great George' marketing department segments its customer base into two parts: local patrons and tourists. Fun-Land assumes local patrons are more price sensitive than out-of—town tourists. Yearly demand and marginal revenue relations for overnight lodging services, Q, are as follows: Locals PL = $40 — $0.0007QL MRL = A TRL/AQL = $40 — $0.0014QL Tourists PT = $50 — $0.0004Qr MR1 = ATRTIAQT = $50 — $0.0008Qr Average variable costs for labor and materials are constant at $35 per unit. A. Assuming the company can discriminate in pricing between locals and tourist customers through coupons distributed to locals via local shops, calculate the pro?t-maximizing price, output, and total pro?t contribution levels. B. Calculate point price elasticities of demand for each customer class at the activity levels identi?ed in part A. Are the differences in these elasticities consistent with your recommended price differential? Explain C. If you are not able to segment the market and instead charge one uniform price, to all consumers, what price should you charge and what are your pro?ts? Does market segmentation increase your pro?ts?

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