
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question 1 part a please

Transcribed Image Text:15-FL20: Problem Set X
lai_146 fl20_ps5 (1).pdf
fos/Downloads/lai_146_fl20_ps5%20(1).pdf
1. A movie theater as a local monopoly faces two groups of moviegoers, students and non-
students. The students' demand function for movie tickets is Qs = 200 – 20ps, and the
* non-students' demand function is Qn = 100 – 5p,. The theater incurs zero marginal
cost of serving additional customer, but there is a fixed cost of showing a movie at $100.
(a) 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?
(b) The movie theater now charges different prices to students and non-students.
(i) What could be a means for the movie theater to separate the two groups of
moviegoers?
(ii) To maximize profit, how many tickets will be sold to students and non-students
and at what prices?
(iii) What will be the movie theater's profit from group price discrimination?
2. The individual demand for rides at an amusement park in Ellentown, Donkey Park, is
represented by the demand function q = 8- p, where q is the number of rides and p is
the price. Donkey Park incurs a constant marginal and average cost of $2 per ride.
(a) Suppose Donkey Park employs block pricing with two blocks. Find the profit-
maximizing blocks and the corresponding block prices.
(b) Suppose Donkey Park employs two-part pricing. Find the profit-maximizing en-
trance fee and charge per ride.
(c) Without calculating the deadweight loss, argue which pricing method, the one in
(a) or the one in (b), results in a lower deadweight loss.
3. The inverse demand a monopoly faces is
1O
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