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?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.6P

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