Problem set 6

# Problem set 6 - Econ 1100 Professor Lise Vesterlund Name...

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Econ 1100 Name:________________ Professor Lise Vesterlund Group members:________ _____________________ _____________________ Problem Set 6 Due November 25 Problem 1: Students and non-students both like to go to the movies. The nightly demand for movie tickets by students can be described by the following equation q S = 200 - 20p S , and the demand by non-students is given by the equation q N = 100 - 5p N. Suppose the marginal cost of an additional customer is 0 and that the fixed cost of showing the movie is \$100 per night. a. How many tickets would be sold each night if the profit maximizing monopolist charges the same price of students and non-students? b. At what price would this number of tickets be sold? c. What is the firm’s profit? d. How many tickets are sold to students? How many tickets are sold to non-students?

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e. What price would the monopolist charge of students and of non-students if she didn’t have to charge the same price of the two? f. How many student and non-student tickets are sold at these prices? g. How much profit will the movie theater make in this case?
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