What is profit maximizing pricing policy
Course:- Microeconomics
Reference No.:- EM13915402

Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Microeconomics

The manager of a local movie theater believes that demand for a film depends on when the movie is shown. Early moviegoers who go to the films before 5pm are more sensitive to price than are even-ing moviegoers. With some market research, the manager discovers that the demand curves for day-time (D) and evening (E) moviegoers are QD=100-10PD and QE=140-10PE respectively. The marginal cost of showing a movie is constant and equal to $3 per customer no matter when the movie is shown. This includes the cost of ticketing and cleaning.

a. What is profit maximizing pricing policy if the manager charges the same price for daytime and evening moviegoers? What is attendance in each showing and what is aggregate profit per day?

b.Now suppose the manager adopts a third-degree pricing discrimination scheme, setting a different day and evening price. What are the profit maximizing prices? What is attendance at each ses-sion? Confirm that aggregate attendance is as in part a what is aggregate profit per day?


Put your comment

Ask Question & Get Answers from Experts
Browse some more (Microeconomics) Materials
Create organizational improvement outcomes that are a direct remedy to the organizational issues. Apply human behavior theories and concepts and validate your recommendation
In the previous problem, assume that the parents stop their contribution after 18 years (when their child enters a college). Use the modified version of Eq. (12.31), labeled
If the current inflation rate is 3.3%, potential gdp is $16.9 trillion, and actual GDP is $15.7 trillion, what is the appropriate federal funds rate according to the Taylor Ru
Draw a graph to analyse the effects of 40 per cent tariff rate in Korea on the price, domestic supply of and demand for beef, and compare the situation with no tariff case.
A firm in a perfectly competitive market invents a method of production that lowers marginal costs. What happens to output What happens to the price it charges A. The firm h
The Big Box Company is a firm in a perfectly competitive industry. The average rate of return on capital in this industry is 10%. Thus, if the Big Box Company earns a 10% ra
Suppose that as the economic recovery strengthened consumer expectations of annual inflation increased from 2% to 3.5 % and, at the same time, the expected real rate of return
a) Graph the budget constraint without the policy (without the cost subsidy), illustrating on the graph the role of K (the daycare cost), the weekly market wage rate w, weekly