Question Details

what will the movie theater- profit be 



1. Question: The movie theater in Collegetown serves two kinds of customers: students and pro-fessors. There are 900 students and 100 professors in Collegetown. Each student- willingness to pay for a movie ticket is $5. Each professor- willingness to pay for a movie ticket is $10. Each will buy at most one ticket. The movie theater- marginal cost per ticket is constant at $3, and there is no fixed cost. 
a. Suppose the movie theater cannot price-discriminate and needs to charge both students and professors the same price per ticket. If the movie theater charges $5, who will buy tickets and what will the movie theater- profit be? How large is consumer surplus? 
b. If the movie theater charges $10, who will buy movie tickets and what will the movie theater- profit be ? How large is consumer surplus? 
c. Now suppose that, if it chooses to, the movie theater can price-discriminate between students and professors by requiring students to show their student ID. If the movie theater charges students $5 and professors $10, how much profit will the movie theater make? How large is consumer surplus? 
2. Question: A monopolist knows that in order to expand the quantity of output it produces from 8 to 9 units that it must lower the price of its output from $2 to $1. Calculate the quantity effect and the price effect. Use these results to calculate the monopolist- marginal revenue of producing the 9th unit. The marginal cost of producing the 9th unit is positive. Is it a good idea for the monopolist to produce the 9th unit? 



Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help