In a small college town there is only one movie theater. In a given month, if the theater is open, the owners have to pay a fixed amount of $6,000 for the films, ushers, etc., regardless of how many people come to the movies. For simplicity, assume that if the theater is closed, its costs are zero. The demand function for movie tickets in the town is characterized by??= 45−QT/60a. Find the profit-maximizing price and quantity of movie tickets, and indicate them on the graph above. How much would the theater make in profits?b. Suppose the local government implements a property tax, so that each month the theater now must pay a lump sum tax of $700. What will be the price and quantity of movie tickets under this tax? 5. In a small college town there is only one movie theater. In a given month, if thetheater is open, the owners have to pay a fixed amount of $6,000 for the films,ushers, etc., regardless of how many people come to the movies. For simplicity,assume that if the theater is closed, its costs are zero. The demand function for movietickets in the town is characterized by Pr = 4560a Find the profit-maximizing price and quantity of movie tickets, andindicate them on the graph above. How much would the theater make inprofits?b. Suppose the local government implements a property tax, so that eachmonth the theater now must pay a lump sum tax of $700. What will bethe price and quantity of movie tickets under this tax?

Given, Total fixed cost = FC =$6000 The demand function for movie tickets, PT = 45 – QT/60 a) Since…

Answered: In a small college town there is only…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In a small college town there is only one movie theater. In a given month, if the theater is open, the owners have to pay a fixed amount of $6,000 for the films, ushers, etc., regardless of how many people come to the movies. For simplicity, assume that if the theater is closed, its costs are zero. The demand function for movie tickets in the town is characterized by

??= 45−QT/60

a. Find the profit-maximizing price and quantity of movie tickets, and indicate them on the graph above. How much would the theater make in profits?

b. Suppose the local government implements a property tax, so that each month the theater now must pay a lump sum tax of $700. What will be the price and quantity of movie tickets under this tax?

5. In a small college town there is only one movie theater. In a given month, if the
theater is open, the owners have to pay a fixed amount of $6,000 for the films,
ushers, etc., regardless of how many people come to the movies. For simplicity,
assume that if the theater is closed, its costs are zero. The demand function for movie
tickets in the town is characterized by Pr = 45
60
a Find the profit-maximizing price and quantity of movie tickets, and
indicate them on the graph above. How much would the theater make in
profits?
b. Suppose the local government implements a property tax, so that each
month the theater now must pay a lump sum tax of $700. What will be
the price and quantity of movie tickets under this tax?

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