A restaurant, has two main courses, steak and fish. Assume for simplicity that both specialties can be prepared at zero marginal cost. The restaurant has two loyal diners: Mr. A, who is willing to pay $120 for the steak and $40 for the sea bass, and Ms. B, who is willing to pay $50 for the steak and $150 for the fish. a) The restaurant would like to charge Mr. A more for the steak and Ms. B more for the fish. Would it be difficult to do this? Why? b) Suppose the restaurant decides to offer a special menu that includes both the ribeye steak and the fish. What price should it set for the menu? How much profit will the restaurant make under this arrangement?
A restaurant, has two main courses, steak and fish. Assume for simplicity that both specialties can be prepared at zero marginal cost. The restaurant has two loyal diners: Mr. A, who is willing to pay $120 for the steak and $40 for the sea bass, and Ms. B, who is willing to pay $50 for the steak and $150 for the fish. a) The restaurant would like to charge Mr. A more for the steak and Ms. B more for the fish. Would it be difficult to do this? Why? b) Suppose the restaurant decides to offer a special menu that includes both the ribeye steak and the fish. What price should it set for the menu? How much profit will the restaurant make under this arrangement?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A restaurant, has two main courses, steak and fish. Assume for simplicity that both specialties can be prepared at zero marginal cost.
The restaurant has two loyal diners: Mr. A, who is willing to pay $120 for the steak and $40
for the sea bass, and Ms. B, who is willing to pay $50 for the steak and $150 for the fish.
a) The restaurant would like to charge Mr. A more for the steak and Ms. B more for
the fish. Would it be difficult to do this? Why?
b) Suppose the restaurant decides to offer a special menu that includes both the ribeye steak
and the fish. What
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