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?
a both y and X buys profit $2200 consumer surplus $ 5000... View the full answer
- For question C, how can Y customers pay if they are charged $10 yet they are only willing to pay $5?
- May 08, 2018 at 10:04pm
- I think I have considered it wrong, it should be X buys profit $7000 consumer surplus $ 5000
- May 09, 2018 at 9:04am
- but one more point is, this is not correct with price discrimination
- May 09, 2018 at 9:05am
- what do you mean it's not correct with price discrimination? I'm sorry I'm confused.
- May 09, 2018 at 12:57pm