What price should be set for each group

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Reference no: EM13245196

A nightclub manager realizes that demand for drinks is more elastic among students, and is trying to determine the optimal pricing schedule. Specifically, he estimates the following average demands:

Under 25: qs = 18 - 5p
Over 25: qa = 10 - 2p
The two age groups visit the night club in equal numbers on average. Assume that drinks cost the nightclub $2 each.

a) If the market cannot be segmented, what is the uniform monopoly price?
b) If the night club can charge according to whether or not the customer is a student but is limited to linear pricing, what price (per drink) should be set for each group?

Reference no: EM13245196

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