Day at a price of pw per glass of wine

Reference no: EM133442478

Question: Jackie owns a Jazz club in Manhattan and charges an entrance fee for her club. There are two types of customers coming for live music to Jackie's club: 1) Those who live in the Upper East Manhattan, and 2) Those who live in the Upper West Manhattan, and Jackie cannot decide who lives where. Jackie does not own a liqueur license, hence cannot sell any alcoholic beverages. So, Jackie allows her customers to bring their own wine. The unit cost (i.e., marginal cost) of a glass of wine is $8 for anyone in the city.

There are roughly 40 customers from east and 80 customers from west who come to the club every day. Jackie does not have any fixed cost as the Jazz band members are all her friends and they play in the club for free. The daily inverse demand for wine for a customer who resides in the Upper East Manhattan is Pe = 24 - Qe, where QE is the number of glasses of wine that one East side customer wants to bring to the club in a day at a price of Pe per glass of wine. The daily inverse demand for wine for a customer who resides in the Upper West side is Pw = 18 - Qw, where Qw is the number of glasses of wine that one West side customer wants to bring in a day at a price of Pw per glass of wine.

Reference no: EM133442478

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