3. Kevin's willingness-to-pay for a wing is the following function of Q, the number wings consumed: WTP=4-250 Suppose you charge him $1 per wing. How many wings will he eat? Why? Now suppose you charge $1 per wing and in addition charge a fee at the door. What is the maximum fee you can charge him? (Hint: the concept of consumer surplus is pertinent!) If you collect $1 per wing and the fee at the door you just found, what is the total revenue you can collect from Kevin? Now find the total revenue you will be able to collect if you charge him $.50 per wing. Finally, what is the total revenue you can collect if you charge nothing per wing only the fee at the door?

3. Kevin's willingness-to-pay for a wing is the following function of Q, the number wings consumed: WTP=4-250 Suppose you charge him $1 per wing. How many wings will he eat? Why? Now suppose you charge $1 per wing and in addition charge a fee at the door. What is the maximum fee you can charge him? (Hint: the concept of consumer surplus is pertinent!) If you collect $1 per wing and the fee at the door you just found, what is the total revenue you can collect from Kevin? Now find the total revenue you will be able to collect if you charge him $.50 per wing. Finally, what is the total revenue you can collect if you charge nothing per wing only the fee at the door?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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