You live in a town with 300 adults and 200 children, and you are thinking about putting on a playto entertain your neighbors and make some money. A play has a fixed cost of $2,000, but selling an extra ticket has zero marginal cost. Here are the demand schedules for your two types of customers:PriceAdultsChildren(Dollars) (Tickets) (Tickets)100091000820007300063000530010043002003300200230020013002000300200
The city council passes a law prohibiting you from charging different prices to different customers.Now you set a price of $7 for all tickets, resulting in $100in profit.Indicate whether each of the following groups of people is better off, worse off, or the same because of the law prohibiting price discrimination.Group of PeopleBetter Off Worse OffUnchangedAdultsChildrenYou, the ProducerSuppose the fixed cost of the play were $2,500 rather than $2,000.Complete the following sentences indicating how this would change your answers to the previous parts.
16. Problems and Applications Q10Complete the following table by finding the price and quantity that maximize the company’s profit and the price and quantity that maximize social welfare.