Which pricing method does the producer prefer?

Suppose adults have the demand curve p=30-(2/5) quantity for tickets to local community

Suppose adults have the demand curve p=30-(2/5) quantity for tickets to local community theater. Children have a demand curve of p=10-(1/5) quantity. Furthermore, marginal cost = average cost = 4

1) Determine the price charged and number of tickets sold in each separate market. Draw a graph for each market.

2) Determine the total consumer surplus and the total producer surplus; Label these areas on your Graph.

3) Now, assume the theater wants to charge a single, uniform price in both markets. Draw a graph of the combined demand, and show the uniform price charged and total amount sold as well as the total consumer and producer surplus.

4) Determine consumer surplus, producer surplus with a uniform price. Label these areas on the graph.

5) Which pricing method does the producer prefer?

Answer
Submitted by shri21 on Sat, 2016-02-06 05:09

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