Suppose the movie theater has two types of customers: college students and senior citizens. College students have a willingness to pay $20 and senior citizens have a willingness to pay $5. The theater potentially has 10 college students and 20 senior citizen customers. The movie theater incurs no cost when showing the movie, so profit is the same as revenue. How does total surplus change if the movie theater goes from charging a single price to perfectly price discriminating?

Suppose the movie theater has two types of customers: college students and senior citizens. College students have a willingness to pay $20 and senior citizens have a willingness to pay $5. The theater potentially has 10 college students and 20 senior citizen customers. The movie theater incurs no cost when showing the movie, so profit is the same as revenue. How does total surplus change if the movie theater goes from charging a single price to perfectly price discriminating?

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter9: Monopoly

Section: Chapter Questions

Problem 15SQ

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Question

3. Suppose the movie theater has two types of customers: college students and senior citizens. College
students have a willingness to pay $20 and senior citizens have a willingness to pay $5. The theater
potentially has 10 college students and 20 senior citizen customers. The movie theater incurs no cost
when showing the movie, so profit is the same as revenue. How does total surplus change if the
movie theater goes from charging a single price to perfectly price discriminating?

PA
4. A monopoly sells its good in the US and Japanese markets. The American inverse demand function is
100 - QA, and the Japanese inverse demand function is pj = 80 – 2Q₁. The firm marginal
cost of production is m = 20 in both countries. If the firm can prevent resale, what price will it
charge in both markets?
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