Use this information to answer the next six questions. The following table shows a community's demand for movie tickets. Assume that only two firms (Showtime Theater and Big Screen Cinema) sell in this market, that each firm offers the same quality of service and movie selection, and that each firm's marginal cost is constant and equal to zero due to excess capacity. Number of Ticket Price (P). Tickets Sold (Q) Total Revenue (TR) $10 $0 $9 50 $450 $8 100 $800 $7 150 $1,050 $6 200 $1,200 $5 250 $1,250 $4 300 $1,200 $3 350 $1,050 $2 400 $800 $1 450 $450 $0 500 $0 Listed below are four different collusive agreements that Showtime Theater and Big Screen Cinema are considering. Assuming both firms will abide by the terms, which collusive agreement(s) would maximize total profit in the market? 1. Showtime Theater supplies 100 tickets and Big Screen Cinema supplies 50 tickets. II. Showtime Theater supplies 75 tickets and Big Screen Cinema supplies 125 tickets. III. Showtime Theater supplies 125 tickets and Big Screen Cinema supplies 125 tickets. IV. Showtime Theater supplies 50 tickets and Big Screen Cinema supplies 200 tickets. O Agreement I only O Agreements I and Il only IvuTver UI Ticket Price (P) Tickets Sold (Q) Total Revenue (TR) $10 $0 $9 50 $450 $8 100 $800 $7 150 $1,050 $6 200 $1,200 $5 250 $1,250 $4 $1,200 $1,050 300 $3 350 $2 400 $800 $1 450 $450 $0 500 $0 Listed below are four different collusive agreements that Showtime Theater and Big Screen Cinema are considering. Assuming both firms will abide by the terms, which collusive agreement(s) would maximize total profit in the market? 1. Showtime Theater supplies 100 tickets and Big Screen Cinema supplies 50 tickets. IL Showtime Theater supplies 75 tickets and Big Screen Cinema supplies 125 tickets. III. Showtime Theater supplies 125 tickets and Big Screen Cinema supplies 125 tickets. IV. Showtime Theater supplies 50 tickets and Big Screen Cinema supplies 200 tickets. O Agreement I only O Agreements l and II only O Agreements Il and III only O Agreement Il only O Agreements Il and IV only

Use this information to answer the next six questions. The following table shows a community's demand for movie tickets. Assume that only two firms (Showtime Theater and Big Screen Cinema) sell in this market, that each firm offers the same quality of service and movie selection, and that each firm's marginal cost is constant and equal to zero due to excess capacity. Number of Ticket Price (P). Tickets Sold (Q) Total Revenue (TR) $10 $0 $9 50 $450 $8 100 $800 $7 150 $1,050 $6 200 $1,200 $5 250 $1,250 $4 300 $1,200 $3 350 $1,050 $2 400 $800 $1 450 $450 $0 500 $0 Listed below are four different collusive agreements that Showtime Theater and Big Screen Cinema are considering. Assuming both firms will abide by the terms, which collusive agreement(s) would maximize total profit in the market? 1. Showtime Theater supplies 100 tickets and Big Screen Cinema supplies 50 tickets. II. Showtime Theater supplies 75 tickets and Big Screen Cinema supplies 125 tickets. III. Showtime Theater supplies 125 tickets and Big Screen Cinema supplies 125 tickets. IV. Showtime Theater supplies 50 tickets and Big Screen Cinema supplies 200 tickets. O Agreement I only O Agreements I and Il only IvuTver UI Ticket Price (P) Tickets Sold (Q) Total Revenue (TR) $10 $0 $9 50 $450 $8 100 $800 $7 150 $1,050 $6 200 $1,200 $5 250 $1,250 $4 $1,200 $1,050 300 $3 350 $2 400 $800 $1 450 $450 $0 500 $0 Listed below are four different collusive agreements that Showtime Theater and Big Screen Cinema are considering. Assuming both firms will abide by the terms, which collusive agreement(s) would maximize total profit in the market? 1. Showtime Theater supplies 100 tickets and Big Screen Cinema supplies 50 tickets. IL Showtime Theater supplies 75 tickets and Big Screen Cinema supplies 125 tickets. III. Showtime Theater supplies 125 tickets and Big Screen Cinema supplies 125 tickets. IV. Showtime Theater supplies 50 tickets and Big Screen Cinema supplies 200 tickets. O Agreement I only O Agreements l and II only O Agreements Il and III only O Agreement Il only O Agreements Il and IV only

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter23: Price-searcher Markets With Low Entry Barriers

Section: Chapter Questions

Problem 17CQ

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