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Please show me how to solve the following answers: The restaurant serves two types of customers a month. Customer X and customer Y. There about 1000...

Please show me how to solve the following answers:


1.             The restaurant serves two types of customers a month. Customer X and customer Y. There about 1000 customer X and 100 customer Y.  Customers Y are willing to pay each is $5 for a meal. Each X's willingness to pay is $10. Each will purchase only one meal. The restaurant's marginal cost per meal is constant at $3, and there is no fixed cost.







a.        Suppose the restaurant cannot price-discriminate and charges both X and Y the same price per Meal. If the restaurant charges $5, who will buy the meal and what will the restaurant's profit be? How large is consumer surplus?









b.        If the restaurant charges $10, who will buy the meal and what will the restaurant's is profit be? How large is consumer surplus?








c.        Assuming the restaurant can price-discriminate between X and Y by requiring X to show their ID, charging them $5 and Y $10, how much profit will the restaurant make? How large is consumer surplus?

Top Answer

a both y and X buys profit $2200 consumer surplus $ 5000... View the full answer

4 comments
  • For question C, how can Y customers pay if they are charged $10 yet they are only willing to pay $5?
    • stevenprushsprush
    • May 08, 2018 at 10:04pm
  • I think I have considered it wrong, it should be X buys profit $7000 consumer surplus $ 5000
    • ujjawal2610
    • May 09, 2018 at 9:04am
  • but one more point is, this is not correct with price discrimination
    • ujjawal2610
    • May 09, 2018 at 9:05am
  • what do you mean it's not correct with price discrimination? I'm sorry I'm confused.
    • stevenprushsprush
    • May 09, 2018 at 12:57pm

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