Suppose a movie theater determines that the elasticity of demand for movie tickets is -2.0 for senior citizens and –1.5 for adults under age 65, and the marginal cost is $2 per consumer.  Use the Lerner index to determine how much senior citizens should be charged and how much adults under age 65 should be charged. A different movie theater, which faces the same marginal costs, charges consumers $6 for matinee movies and $10 for evening movies.  Use the Lerner Index to calculate the price elasticity of demand for matinee consumers and evening consumers.

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