Three consumers have personal tastes for drinks at the Crunkleton. The Crunkleton Cocktail Bar charges a membership fee to enter the bar and the drinks are $15 a piece (MC=15). The three types of consumers are undergrads, MBA students, and alumni. Undergrads have a demand of P=16-QU , MBA students have a demand of P= 22-0.2Qm , and alumni have a demand of P=22-0.5QA . Assuming there are equal number of undergrads, MBAs, and alumni, and costs are only variable so C=15Q. d) What is the profit if the bar charges a fee that encourages only MBA to go to the bar? Which fee will the bar choose to maximize profits (MBA, undergrads, or alumni)?

A production function is an equation in economics that describes the relationship between the…

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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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Three consumers have personal tastes for drinks at the Crunkleton. The Crunkleton Cocktail Bar charges a membership fee to enter the bar and the drinks are $15 a piece (MC=15). The three types of consumers are undergrads, MBA students, and alumni. Undergrads have a demand of P=16-Q_U , MBA students have a demand of P= 22-0.2Q_m , and alumni have a demand of P=22-0.5Q_{A .}Assuming there are equal number of undergrads, MBAs, and alumni, and costs are only variable so C=15Q.

d) What is the profit if the bar charges a fee that encourages only MBA to go to the bar? Which fee will the bar choose to maximize profits (MBA, undergrads, or alumni)?

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