A movie theater as a local monopoly faces two groups of moviegoers, students and nonstudents. The students' demand function for movie tickets is Qs = 200 – 20ps, and the non-students' demand function is Qn = 100- 5pn. The theater incurs zero marginal cost of serving additional customer, but there is a fixed cost of showing a movie at $100. The movie theater charges a uniform ticket price to both students and non- students. (i) Sum the demand functions of the two groups of moviegoers. (ii) To maximize profit, how many tickets will be sold to students and non-students and at what price? (iii) What will be the movie theater's profit from uniform pricing?
A movie theater as a local monopoly faces two groups of moviegoers, students and nonstudents. The students' demand function for movie tickets is Qs = 200 – 20ps, and the non-students' demand function is Qn = 100- 5pn. The theater incurs zero marginal cost of serving additional customer, but there is a fixed cost of showing a movie at $100. The movie theater charges a uniform ticket price to both students and non- students. (i) Sum the demand functions of the two groups of moviegoers. (ii) To maximize profit, how many tickets will be sold to students and non-students and at what price? (iii) What will be the movie theater's profit from uniform pricing?
Chapter8: Monopoly
Section: Chapter Questions
Problem 15SQ
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Microeconomics: Principles & Policy
Economics
ISBN:
9781337794992
Author:
William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:
Cengage Learning