Suppose there are three types of consumers who attend concerts at your university's performing artscenter: students, staff, and faculty. Each of these groups has a different willingness to pay for tickets;within each group, willingness to pay is identical. There is a fixed cost of $1,000 to put on a concert, butthere are essentially no variable costs.For each concert:•.There are 150 students willing to pay $20.There are 220 staff members willing to pay $35.There are 100 faculty members willing to pay $50.a. If the performing arts center can charge only one price, what price should it charge?b. What are profits at this price?c. If the performing arts center can price-discriminate and charge two prices, one for students and anotherfor faculty/staff, what are its profits?d. If the performing arts center can perfectly price-discriminate and charge students, staff, andfaculty three separate prices, what are its profits?

Price discrimination is a pricing strategy where a seller charges different prices to different…

Suppose there are three types of consumers who attend concerts at your university's performing arts center: students, staff, and faculty. Each of these groups has a different willingness to pay for tickets; within each group, willingness to pay is identical. There is a fixed cost of $1,000 to put on a concert, but there are essentially no variable costs. For each concert:

Suppose there are three types of consumers who attend concerts at your university's performing arts center: students, staff, and faculty. Each of these groups has a different willingness to pay for tickets; within each group, willingness to pay is identical. There is a fixed cost of $1,000 to put on a concert, but there are essentially no variable costs. For each concert:

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose there are three types of consumers who attend concerts at your university's performing arts
center: students, staff, and faculty. Each of these groups has a different willingness to pay for tickets;
within each group, willingness to pay is identical. There is a fixed cost of $1,000 to put on a concert, but
there are essentially no variable costs.
For each concert:
•
.
There are 150 students willing to pay $20.
There are 220 staff members willing to pay $35.
There are 100 faculty members willing to pay $50.
a. If the performing arts center can charge only one price, what price should it charge?
b. What are profits at this price?
c. If the performing arts center can price-discriminate and charge two prices, one for students and another
for faculty/staff, what are its profits?
d. If the performing arts center can perfectly price-discriminate and charge students, staff, and
faculty three separate prices, what are its profits?

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Step 4: Find profit when two prices can be charged

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