Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 14, Problem 6PA
Subpart (a):
To determine
Subpart (b):
To determine
Price discrimination and revenue and profits.
Subpart (c):
To determine
Price discrimination and revenue and profits.
Subpart (d):
To determine
Price discrimination and revenue and profits.
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Students have asked these similar questions
You live in a town with 300 Adults and 200 children, and you arc thinking about putting on a play to entertain your neighbors and make some money. A play has a fixed cost of $2,000, but selling an extra ticket has zero marginal cost. Here are the demand schedules for your two types of customer:
a. To maximize profit, what price would you charge for an adult ticket? For a child's ticket?How much profit do you make?b. The city council passes a law prohibiting you from charging different prices to different customers. What price do you set for a ticket now? How much profit do you make?c. Who is worse off because of the law prohibiting price discrimination? Who is better off? (If you can, quantify the changes in welfare.)d. If the fixed cost of the play were $2,500 rather than $2,000, how would your answers to parts (a), (b), and (c) change?
Johnny Rockabilly has just finished recording his latest CD. His record company’smarketing department determines that the demand for the CD is as follows:The company can produce the CD with no fixed cost and a variable cost of $5 per CD.a. Find total revenue for quantity equal to 10,000,20,000, and so on. What is themarginal revenue for each 10,000 increase in the quantity sold?b. What quantity of CDs would maximize profit? What would the price be? What wouldthe profit be?c. If you were Johnny's agent, what recording fee would you advise johnny to demandfrom the record company? Why?
Pic 1 :
You live in a town with 300 adults and 200 children, and you are thinking about putting on a play to entertain your neighbors and make some money. A play has a fixed cost of $2,000, but selling an extra ticket has zero marginal cost. Here are the demand schedules for your two types of customers:
Price
Adults
Children
(Dollars)
(Tickets)
(Tickets)
10
0
0
9
100
0
8
200
0
7
300
0
6
300
0
5
300
100
4
300
200
3
300
200
2
300
200
1
300
200
0
300
200
To maximize profit, you would charge $ ?
for an adult's ticket and $ ?
for a child's ticket. Total profit in this case would be $ ?
The city council passes a law prohibiting you from charging different prices to different customers.
Now you set a price of $ ?
for all tickets, resulting in $ ?
in profit.
Pic 2 :
Indicate whether each of the following groups of people is better off, worse off, or the same because of the law prohibiting price discrimination.…
Chapter 14 Solutions
Essentials of Economics (MindTap Course List)
Ch. 14.1 - Prob. 1QQCh. 14.2 - Prob. 2QQCh. 14.3 - Prob. 3QQCh. 14.4 - Prob. 4QQCh. 14.5 - Prob. 5QQCh. 14 - Prob. 1CQQCh. 14 - Prob. 2CQQCh. 14 - Prob. 3CQQCh. 14 - Prob. 4CQQCh. 14 - Prob. 5CQQ
Ch. 14 - Prob. 6CQQCh. 14 - Prob. 1QRCh. 14 - Prob. 2QRCh. 14 - Prob. 3QRCh. 14 - Prob. 4QRCh. 14 - Prob. 5QRCh. 14 - Prob. 6QRCh. 14 - Prob. 7QRCh. 14 - Prob. 8QRCh. 14 - Prob. 1PACh. 14 - Prob. 2PACh. 14 - Prob. 3PACh. 14 - Prob. 4PACh. 14 - Prob. 5PACh. 14 - Prob. 6PACh. 14 - Prob. 7PACh. 14 - Prob. 8PACh. 14 - Prob. 9PACh. 14 - Prob. 10PACh. 14 - Prob. 11PACh. 14 - Prob. 12PA
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