Rio live in a town with 300 adults and 200 children, and he is thinking about putting on a play to entertain your neighbors and make some money. A play has a fixed cost of $2,000 except all cost like maintenance costs until two years, but selling an extra ticket has zero marginal cost. Here are the demand schedules for his two types of customer: Price Adults Children $10 9. 100 8 200 7 300 300 300 100 4 300 200 3 300 200 2 300 200 1 300 200 300 200 a. To maximize profit, what price would he charge for an adult ticket? For a child's ticket? How much the profit? (Hint: total cost for this year include fixed cost) b. Suppose in this year, the city council passes a law prohibiting him from charging different prices to different customers. What price does he set for a ticket now? How much profit now? (Hint: when quantity of produced yield maximum revenue or the sum of these both revenues sastify)

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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1. Rio live in a town with 300 adults and 200 children, and he is thinking about putting
on a play to entertain your neighbors and make some money. A play has a fixed cost
of $2,000 except all cost like maintenance costs until two years, but selling an extra
ticket has zero marginal cost. Here are the demand schedules for his two types of
customer:
Price
Adults
Children
$10
9
100
8
200
7
300
6
300
300
100
4
300
200
300
200
300
200
1
300
200
300
200
a. To maximize profit, what price would he charge for an adult ticket? For a child's
ticket? How much the profit? (Hint: total cost for this year include fixed cost)
b. Suppose in this year, the city council passes a law prohibiting him from charging
different prices to different customers. What price does he set for a ticket now?
How much profit now? (Hint: when quantity of produced yield maximum revenue
or the sum of these both revenues sastify)
Transcribed Image Text:1. Rio live in a town with 300 adults and 200 children, and he is thinking about putting on a play to entertain your neighbors and make some money. A play has a fixed cost of $2,000 except all cost like maintenance costs until two years, but selling an extra ticket has zero marginal cost. Here are the demand schedules for his two types of customer: Price Adults Children $10 9 100 8 200 7 300 6 300 300 100 4 300 200 300 200 300 200 1 300 200 300 200 a. To maximize profit, what price would he charge for an adult ticket? For a child's ticket? How much the profit? (Hint: total cost for this year include fixed cost) b. Suppose in this year, the city council passes a law prohibiting him from charging different prices to different customers. What price does he set for a ticket now? How much profit now? (Hint: when quantity of produced yield maximum revenue or the sum of these both revenues sastify)
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