nsidering putting on a special one-time screening of a new movie. This screening sa fixed cost of $2,000, but the marginal cost of selling an additional ticket is zero. cording to a survey, all the adults and seniors would be willing to purchase the kets at $7 and $4 respectively. a. What prices would the movie theater charge for an adult ticket and for a senior's ticket if it wanted to maximize profit? Explain and calculate the profit. b. Suppose a law is passed that prohibits the movie theater from charging different prices to adults and seniors. What price would it set for a ticket now? What is the profit? c. Who is worse off because of the law prohibiting price discrimination? Who is better off? d. If the fixed cost of the concert was $2,500 rather than $2,000, how would your answers to parts-(c) change?

nsidering putting on a special one-time screening of a new movie. This screening sa fixed cost of $2,000, but the marginal cost of selling an additional ticket is zero. cording to a survey, all the adults and seniors would be willing to purchase the kets at $7 and $4 respectively. a. What prices would the movie theater charge for an adult ticket and for a senior's ticket if it wanted to maximize profit? Explain and calculate the profit. b. Suppose a law is passed that prohibits the movie theater from charging different prices to adults and seniors. What price would it set for a ticket now? What is the profit? c. Who is worse off because of the law prohibiting price discrimination? Who is better off? d. If the fixed cost of the concert was $2,500 rather than $2,000, how would your answers to parts-(c) change?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: Monopoly

Section: Chapter Questions

Problem 3PA

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