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Price (dollars per ticket)
Quantity (tickets per show)
Total Cost (dollars per show)
20
0
1,000
18
100
1,600
16
200
2,200
14
300
2,800
12
400
3,400
10
500
4,000
8
600
4,600
6
700
5,200
4
800
5,800
1. At the market equilibrium price, no children under 10 years old attend the circus. Big Top offers children under 10 a discount of 50 percent. How long will this discount change the consumer surplus and producer surplus? Will Big Top be more efficient by offering the discount to children?
2. If Big Top is regulated to produce the efficient output, what is the quantity of tickets sold, and what would be the price of a ticket, and what would be the consumer surplus?
3. If Big Top is regulated to charge a price equal to average total cost, what is the quantity of tickets sold, the price of a ticket, and economic profit?
4. Draw a graph to illustrate the circus market if regulators set a price cap that enables Big Top to break even. How the deadweight loss in your graph?
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