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What is the profit-maximizing quantity of gold

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Reference no: EM132500217

Suppose Aquims's Movie Theater a monopolist in the Lehigh Valley area, finds a way to determine if a potential buyer is a student or not. It uses this information to engage in group price discrimination on their gold purchases. (There are no supply constraints.) The demand curve for non-students is QN = 64-PN. The demand curve for students is QS = 180-3PS. The marginal cost of allowing another movie-watcher into the theater is $4. It is also safe to assume ATC=$2

a. If Aquims's Movie Theater group price discriminates, what is the profit-maximizing quantity of gold and price for the students' group ( ∗ ∗ )?

b. If Aquims's Movie Theater group price discriminates, what is the profit-maximizing quantity of gold and price for the non-students group ( ∗ ∗ )?

c. What is Aquims's Movie Theater profit from price discriminating?

d. Which of the following pricing scenarios would Aquim's Movie Theater prefer? Why?

• Single Price (No price discrimination)

• Perfect Price Discrimination

• Group Price Discrimination

e. Which of the above scenario's would be best for the whole economy (welfare)? Why?

Reference no: EM132500217

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