A movie theater as a local monopoly faces two groups of moviegoers, students and nonstudents. The students' demand function for movie tickets is Qs = 200 – 20ps, and the non-students' demand function is Qn = 100- 5pn. The theater incurs zero marginal cost of serving additional customer, but there is a fixed cost of showing a movie at $100. The movie theater charges a uniform ticket price to both students and non- students. (i) Sum the demand functions of the two groups of moviegoers. (ii) To maximize profit, how many tickets will be sold to students and non-students and at what price? (iii) What will be the movie theater's profit from uniform pricing?

A movie theater as a local monopoly faces two groups of moviegoers, students and nonstudents. The students' demand function for movie tickets is Qs = 200 – 20ps, and the non-students' demand function is Qn = 100- 5pn. The theater incurs zero marginal cost of serving additional customer, but there is a fixed cost of showing a movie at $100. The movie theater charges a uniform ticket price to both students and non- students. (i) Sum the demand functions of the two groups of moviegoers. (ii) To maximize profit, how many tickets will be sold to students and non-students and at what price? (iii) What will be the movie theater's profit from uniform pricing?

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Perfect Competition

It is the structure of the market that is said to exist when with many buyers and sellers exchanging similar commodities and its price is fixed by the market forces, demand, and supply, and a single firm cannot cause an impact over the price or market value of the homogenous product. This structure of the market is called perfect competition.

Question

A movie theater as a local monopoly faces two groups of moviegoers, students and
nonstudents. The students' demand function for movie tickets is Qs = 200 - 20ps,
and the
non-students' demand function is Qn = 100 – 5pn. The theater incurs zero marginal
cost of serving additional customer, but there is a fixed cost of showing a movie at
$100. The movie theater charges a uniform ticket price to both students and non-
students.
(i) Sum the demand functions of the two groups of moviegoers.
(ii) To maximize profit, how many tickets will be sold to students and non-students
and at what price?
(iii) What will be the movie theater's profit from uniform pricing?

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