Suppose that the only movie theater in town has two types of customers, senior citizens and adults. Thedemand curve for senior citizens and adults are given by:Q₁ = 100 - P₁Q2 = 120 - 0.5P₂Where Q₁ denote the number of movie tickets purchased by senior citizens and Q2 denote the numberof movie ticket purchased by adults. The cost function for the movie theater is given by:TC 2000 + 20 (Q₁ + Q₂)Suppose that the theater can charge two different prices and is going to apply the third-degree pricediscrimination as their pricing strategy:Demand curve for senior citizensC.Demand curve for adultsTotal Cost of Productiona. List and explain all the conditions necessary for third-degree price discrimination!b. (i) What prices will the movie theater charge and how many tickets will be sold to each type ofconsumer:(ii) Explain graphically your answer in part b(i,Now suppose that MC is rising, show graphically the case where third-degree pricediscrimination may not be profitable (Hint: Even if the third-degree price discrimination isfeasible, the theater will not sell tickets to both groups of consumers

A monopoly is a market structure in which a single seller or producer dominates the entire supply of…

Suppose that the only movie theater in town has two types of customers, senior citizens and adults. The demand curve for senior citizens and adults are given by: Q₁ = 100 – P₁ Q₂ = 120 - 0.5P₂ Demand curve for senior citizens Demand curve for adults Where Q₁ denote the number of movie tickets purchased by senior citizens and Q₂ denote the number of movie ticket purchased by adults. The cost function for the movie theater is given by: TC = 2000 + 20 (Q₁ + Q₂) Suppose that the theater can charge two different prices and is going to apply the third-degree price discrimination as their pricing strategy: Total Cost of Production a. List and explain all the conditions necessary for third-degree price discrimination! b. (i) What prices will the movie theater charge and how many tickets will be sold to each type of consumer: (ii) Explain graphically your answer in part b(i, c. Now suppose that MC is rising, show graphically the case where third-degree price discrimination may not be profitable (Hint: Even if the third-degree price discrimination is feasible, the theater will not sell tickets to both groups of consumers

Suppose that the only movie theater in town has two types of customers, senior citizens and adults. The demand curve for senior citizens and adults are given by: Q₁ = 100 – P₁ Q₂ = 120 - 0.5P₂ Demand curve for senior citizens Demand curve for adults Where Q₁ denote the number of movie tickets purchased by senior citizens and Q₂ denote the number of movie ticket purchased by adults. The cost function for the movie theater is given by: TC = 2000 + 20 (Q₁ + Q₂) Suppose that the theater can charge two different prices and is going to apply the third-degree price discrimination as their pricing strategy: Total Cost of Production a. List and explain all the conditions necessary for third-degree price discrimination! b. (i) What prices will the movie theater charge and how many tickets will be sold to each type of consumer: (ii) Explain graphically your answer in part b(i, c. Now suppose that MC is rising, show graphically the case where third-degree price discrimination may not be profitable (Hint: Even if the third-degree price discrimination is feasible, the theater will not sell tickets to both groups of consumers

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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