4. (5 points) Price 110- 100- 90 80- 70 60 50 40 30 20- 10 0. MR MC=AC Quantity 00 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Based on the above graph (which summarizes the demand, marginal revenue, and relevant costs for your product), determine your firm's optimal price and output and profit for each of the following scenarios: (a) You engage in two-part pricing. (b) You engage in block pricing. 5. (5 points) Assume a case of price discrimination where a movie theater owner charges $16 from members of the public and $10 from students. Assume that at these prices, 200 members of the public and 300 students purchased tickets. The capacity of the theater is 500 and there are no additional people who might want to go the movie theater. $16 is the maximum price the public are willing to pay for the tickets, and $10 is the maximum price students are willing to pay for the tickets. Assume that the government made such price discrimination illegal (currently that is not the case) and therefore the theater owner had to charge one price from everyone. What single price would the owner charge customers of the movie theater in order to maximize his revenue from the sale of tickets (ignore the revenue from the sale of concessions and anything else)? Assume that the costs of the owner remain the same no matter what price he charges and not matter how many customers buy tickets. Please give an explanation.
4. (5 points) Price 110- 100- 90 80- 70 60 50 40 30 20- 10 0. MR MC=AC Quantity 00 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Based on the above graph (which summarizes the demand, marginal revenue, and relevant costs for your product), determine your firm's optimal price and output and profit for each of the following scenarios: (a) You engage in two-part pricing. (b) You engage in block pricing. 5. (5 points) Assume a case of price discrimination where a movie theater owner charges $16 from members of the public and $10 from students. Assume that at these prices, 200 members of the public and 300 students purchased tickets. The capacity of the theater is 500 and there are no additional people who might want to go the movie theater. $16 is the maximum price the public are willing to pay for the tickets, and $10 is the maximum price students are willing to pay for the tickets. Assume that the government made such price discrimination illegal (currently that is not the case) and therefore the theater owner had to charge one price from everyone. What single price would the owner charge customers of the movie theater in order to maximize his revenue from the sale of tickets (ignore the revenue from the sale of concessions and anything else)? Assume that the costs of the owner remain the same no matter what price he charges and not matter how many customers buy tickets. Please give an explanation.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Transcribed Image Text:4. (5 points)
Price
110-
100-
90
80-
70
60
50
40
30
20-
10
0.
MR
MC=AC
Quantity
00
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Based on the above graph (which summarizes the demand, marginal revenue, and relevant
costs for your product), determine your firm's optimal price and output and profit for each of
the following scenarios:
(a) You engage in two-part pricing.
(b) You engage in block pricing.
5. (5 points) Assume a case of price discrimination where a movie theater owner charges $16
from members of the public and $10 from students. Assume that at these prices, 200 members of
the public and 300 students purchased tickets. The capacity of the theater is 500 and there are no
additional people who might want to go the movie theater. $16 is the maximum price the public
are willing to pay for the tickets, and $10 is the maximum price students are willing to pay for
the tickets.
Assume that the government made such price discrimination illegal (currently that is not the
case) and therefore the theater owner had to charge one price from everyone. What single price
would the owner charge customers of the movie theater in order to maximize his revenue from
the sale of tickets (ignore the revenue from the sale of concessions and anything else)? Assume
that the costs of the owner remain the same no matter what price he charges and not matter how
many customers buy tickets. Please give an explanation.
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