# Problems and Applications Q6You live in a town with 300 adults and 200 children, and you are considering putting on a play to entertain your neighbors and make some money. A play has a fixed cost of $2,000, but selling an extra ticket has zero marginal cost. Below are the demand schedules for two types of customers:### Demand Schedule Table:| Price (Dollars) | Adults (Tickets) | Children (Tickets) ||-----------------|------------------|--------------------|| 10 | 0 | 0 || 9 | 100 | 0 || 8 | 200 | 0 || 7 | 300 | 0 || 6 | 300 | 0 || 5 | 300 | 100 || 4 | 300 | 200 || 3 | 300 | 200 || 2 | 300 | 200 || 1 | 300 | 200 || 0 | 300 | 200 |### Optimization and Profit- To maximize profit, you would charge $ ___ for an adult's ticket and $ ___ for a child's ticket. Total profit in this case would be $ ___.- A law is passed by the city council prohibiting you from charging different prices to different customers. - Now you set a single price of $ ___ for all tickets, resulting in a $ ___ profit.### Welfare AnalysisIndicate whether each of the following groups is better off, worse off, or the same because of the law prohibiting price discrimination:| Group of People | Better Off | Worse Off | Unchanged ||-----------------|------------|-----------|-----------|| Adults | ○ | ○ | ○ || Children | ○ | ○ | ○ || You, the Producer | ○ | ○ | ○ |

Fixed costs are costs that don't change when sales or production volumes rise or diminish. This is…

4. Problems and Applications Q6 You live in a town with 300 adults and 200 children, and you are thinking about putting on a play to entertain your neighbors and make some money. A play has a fixed cost of $2,000, but selling an extra ticket has zero marginal cost. Here are the demand schedules for your two types of customers: Price (Dollars) 10 9 8 7 6 5 4 3 2 1 0 Adults (Tickets) 0 100 200 300 300 300 300 300 Children 300 300 300 Now you set a price of S You, the Producer Children (Tickets) 0 0 0 0 To maximize profit, you would charge $ 0 100 200 200 200 200 200 The city council passes a law prohibiting you from charging different prices to different customers. for an adult's ticket and S for all tickets, resulting in S for a child's ticket. Total profit in this case would be $ in profit. Indicate whether each of the following groups of people is better off, worse off, or the same because of the law prohibiting price discrimination. Group of People Better Off Worse Off Unchanged Adults

4. Problems and Applications Q6 You live in a town with 300 adults and 200 children, and you are thinking about putting on a play to entertain your neighbors and make some money. A play has a fixed cost of $2,000, but selling an extra ticket has zero marginal cost. Here are the demand schedules for your two types of customers: Price (Dollars) 10 9 8 7 6 5 4 3 2 1 0 Adults (Tickets) 0 100 200 300 300 300 300 300 Children 300 300 300 Now you set a price of S You, the Producer Children (Tickets) 0 0 0 0 To maximize profit, you would charge $ 0 100 200 200 200 200 200 The city council passes a law prohibiting you from charging different prices to different customers. for an adult's ticket and S for all tickets, resulting in S for a child's ticket. Total profit in this case would be $ in profit. Indicate whether each of the following groups of people is better off, worse off, or the same because of the law prohibiting price discrimination. Group of People Better Off Worse Off Unchanged Adults

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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