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Question: Suppose that a movie theater sells popcorn. With P as the price for a bag of popcorn, the monthly demand from those over 65 years of age for bags of popcorn is Q_o (P)=1000(5-P) for P<5 and 0 for P≥5, while demand from those under 65 is Q_y (P)=2000(10-P) for P<10 and 0 for P≥10. What is the overall demand for bags of popcorn, counting both purchases by those over 65 and those under 65? Draw the demand curve. [Hint: Think about prices above $10, then between $10 and $5, and finally below $5.] At a price of P = 4, what is the price elasticity of overall demand? What is it for those over 65? For those under 65? What will overall consumer surplus be at a price of P = 4? How much of that surplus is enjoyed by consumers who are over 65 versus those under 65?
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