As a manager of a chain of movie theaters that are monopolies in their respective markets, you have noticed much higher demand on weekends than during the week. You therefore conducted a study thatrevealed two different demand curves at your movie theaters. On weekends the inverse demand function isPWeekend 15-0.001 QWeekend_and on weekdays the inverse demand function isPWeekday 10 0.001 * QWeekdaywhere Q is the number of movie goers and P is the price of a movie. You acquire legal rights from movie producers to show their films for $20,000 per movie, plus a $2 "royalty" for each movie-goerentering your theaters (the average moviegoer in your market watches a movie only once).MRWeekend 15 -0.002 QWeekendMRWeekday 10-0.002"QWeekday1. What are the profit maximizing prices and quantities for Weekend and Weekday markets?2. Draw the graphs of both the Weekend and Weekday markets and determine the optimum prices and quantities3. What are the elasticities of demand for the Weekend and Weekday markets?4. For third degree price discrimination, what is the relationship between pricing and elasticity of demand in the two markets?5. Under what conditions can a firm do third degree price discrimination?

(1)The supply function can be written as Qs=2000+2P. From the supply function inverse supply…

Answered: As a manager of a chain of movie…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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