EXAM1 ARe100b.1 - University of California Davis Department...

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University of California, Davis Department of Agricultural and Resource Economics ARE 100B Winter 2006 Dr. Larson Name: Exam 1 --January 16, 2006 The exam is worth 100 points; values of individual problems are listed in parentheses. Read each question carefully, be as complete as you can, and put down as much of your thought process as possible . But don't put down things that aren't asked for. for each question answer the question asked-- You should draw graphs where appropriate to guide your analysis and help show your reasoning. Good luck!
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ARE 100B 1 Exam 1 1. (15 points) Price Discrimination. You are a theater owner and know you can segment your market into two distinct groups of consumers: kids who are more price-sensitive, and older consumers who are not so price-sensitive. Your investigation of the market has shown that the inverse demand by adults is p 12 q , while the demand by kids is p 4 .2q . Your marginal cost of showing a ! ! " " # $ # $ film is MC 1, and you don't have a seating constraint to worry about. # (5 pts) (a)
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