Economics
5th Edition
ISBN: 9781319066604
Author: Paul Krugman, Robin Wells
Publisher: Worth Publishers
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Chapter 23, Problem 3P
To determine
The type of
Concept Introduction:
Unemployment: Unemployment refers to a situation when a person who is of an age relevant to work and earn, does not have any work and is looking for a job actively.
Types of Unemployment: There are three types of unemployment as given below:
- Cyclical Unemployment: When the economy faces recession, many people lose their jobs and face unemployment and when the recession period is over, people get back their jobs. This cycle is known as cyclic unemployment.
- Structural Unemployment: With the change in time, the
demand for some skills increases in the employees. When the demand for a specific skill increases, the people who do not possess that skill get unemployed. This is known as structural unemployment. - Frictional Unemployment: Sometimes, people may be voluntarily out of job due to reasons like, looking for better opportunities or moving to a new location. This is referred to as frictional unemployment.
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A movie theater is showing two different movies: a Hollywood blockbuster (with 100 customers willing to pay $10 for a ticket, and 100 willing to pay $8) and an independent film that attracts 50 film buffs, willing to pay $20 each. Marginal costs are zero and neither movie can fill theater capacity. What is the theater's maximum profit if it cannot price discriminate (it must charge the same price for both movies) and if it can price discriminate (it may charge different prices for different movies)?
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A movie theater is showing two different movies: a Hollywood blockbuster (with 100 customers willing to pay $10 for a ticket, and 100 willing to pay $8) and an independent film that attracts 50 film buffs, willing to pay $20 each. Marginal costs are zero and neither movie can fill theater capacity. What is the theater's maximum profit if it cannot price discriminate (it must charge the same price for both movies) and if it can price discriminate (it may charge different prices for different movies)?
a. $2,000; $2,600
b. $1,500; $2,100
c. $1,500; $2,000
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