Your local movie theater uses the same group-pricing strategy described in the chapter – charge different prices for adults, children, seniors, and students. However, the theater uses one additional strategy: On Tuesdays, all tickets cost half the regular adult admission - a lower price than any group discount. You notice that the theater is always very crowded on Tuesdays. a. The half-price tickets on Tuesdays illustrates the hurdle method b. The theater does not offer half-price tickets all the time because of the discount effect the hurdle effect

Your local movie theater uses the same group-pricing strategy described in the chapter – charge different prices for adults, children, seniors, and students. However, the theater uses one additional strategy: On Tuesdays, all tickets cost half the regular adult admission - a lower price than any group discount. You notice that the theater is always very crowded on Tuesdays. a. The half-price tickets on Tuesdays illustrates the hurdle method b. The theater does not offer half-price tickets all the time because of the discount effect the hurdle effect

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

a. suppose that the supermarkets combine to form one chain. Using a new diagram, show the equilibrium price and quantity. What is the deadweight loss in this case? Indicate the consumer and producer surplus, how have they changed? b.Assume that the newly formed supermarkets chain can perfectly price discriminate (hint: it means they can charge each consumer the maximum price they he/she is willing to pay – think about our experiment in the lecture deriving the demand curve for your favourite singer’s tickets). How much will be sold and what will be the deadweight loss in this case? Discuss how policymakers approach these sorts of situations, and why.
A profit-maximizing ten-pin bowing club segments its market by practicing third-degree price discrimination. It charges juniors $4 per game based on their price elasticity of demand of –2.0. Its adult customers have a price elasticity of demand of –1.4. The marginal cost per game does not vary by the customer’s age. What price does the ten-pin bowling club charge adult customers?
Demand Factor Initial Value Average American household income $40,000 per year Round trip airfare from Los Angeles (LAX) to Las Vegas (LAS) $200 per round trip Room rate at the Lucky Hotel and Casino, which is near the Big Winner $200 per night Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool Market for Big Winner's Hotel Rooms 500 I Price (Dollars per room) 450 200 400 Quantity Demanded (Hotel rooms per night) 300 350 300 250 Demand Factors 200 150 Average Income (Thousands of dollars) Demand 40 100 50 Airfare from LAX to LAS (Dollars per round trip) 200 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Hotel rooms) Room Rate at Lucky (Dollars per night) 200 PRICE (Dollars per room)
Knoebels Amusement Park in Elysburg, Pennsylvania, charges a lump-sum fee, L, to enter its Crystal Pool. It also charges p per trip down a slide on the pool's water slides. Suppose that 450 teenagers visit the park, each of whom has a demand function of q₁ = 6-p, and that 300 seniors also vist, each of whom has a demand function of q₂ = 5-p. Knoebels's objective is to set L and p so as to maximize its profit given that it has no (non-sunk) cost and must charge both groups the same prices. What are the optimal L and p? The optimal L and p are L=$and p=$. (Enter numeric responses using real numbers rounded to three decimal places.)
Students were able to obtain these tickets, make fictitious reservations, cancel the reservations at the last minute, and secure a seat on the flight at a discounted price. Answer the following questions. 1. Is this a form of price discrimination? Why? Include in your analysis differing levels of elasticity, if relevant, and any other feature 2. Why would an airline use this practice? Provide a dollar and cents example. 3. The airlines caught up with this scheme, what principal of price discrimination did the students violate so as to end it?
The widget market is competitive and includes no transaction costs. Five suppliers are willing to sell one widget at the following prices: $26, $14, $10, $5, and $3 (one seller at each price). Five buyers are willing to buy one widget at the following prices: $10, $14, $26, $34, and $42 (one buyer at each price). For each price shown in the following table, use the given information to enter the quantity demanded and quantity supplied. Price Quantity Demanded Quantity Supplied ($ per widget) (widgets) (widgets) $3 $5 $10 $14 $26 $34 $42 In this market, the equilibrium price will be per widget, and the equilibrium quantity will be widgets.
Imagine you are the owner of the Omaha Surfboard Company. You have a branch in Omaha and in Long Beach CA. After some market research you find the following surfboard demand for each market, Omaha Demand: Qo = 1000 – 10P Long Beach Demand: QL = 1000 – 5P Combined/Total Demand: Q = 2000 – 15P Your marginal cost is constant at $40. a. Find your price and quantity if you treated the market as a single entity with a single price. What is your profit? (Hint: find Marginal Revenue and set equal to MC) b. If you treat each market separately, what is P and Quantity in each market, and final profit?
10.
A university’s students have demand for credit hours given by q = 30 – 0.04p, where p is the price per credit hour. a) If the university charges only one price for credit hours irrespective of the number of credit hours a student enrolls for, identify the price per credit hour that would maximize revenue for the university. b) If the university adopts a two-tier pricing structure, identify the structure that would maximize revenue for the university. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Suppose you are a monopolist and you have two customers, A and B. Each will buy either zero or one unit of the good you produce. A is willing to pay up to $35 for your product; B is willing to pay up to $10. You produce this good at a constant average and marginal cost of $8. If you could not engage in third-degree price discrimination, what price would you charge? OA $10. OB. $15. OC. $35. OD. $45. If you could practice third-degree price discrimination, you will earn a profit of $ (For simplicity, assume that if a consumer is indifferent between buying and not buying, he will buy.) Click to select your answer(s)
Which of the following statements about price discrimination are true? Choose one or more: A. One example of price discrimination is Subway charging more for its footlong subs than for its 6-inch subs. B. One example of price discrimination is a movie theater charging a lower price for a 2:00 PM movie than it charges for the same movie at 8:00 PM. C. One example of price discrimination is a restaurant that provides a "senior discount" to people over age 50. D. Price discrimination usually leads to higher total surplus than single-price monopolies, and it can even maximize total surplus. a
What would consumer surplus be?