Question

Suppose adults have the following demand curve for a local community theater: Pa=30-(1/5)Qa . Children have...

Suppose adults have the following demand curve for a local community theater: Pa=30-(1/5)Qa . Children have the demand curve Pc=10-(1/10)Qc .Furthermore, MC=AC=2.

a. (6 pts) Solve for the price charged and number of tickets sold in each separate market. Draw a graph for each market.

b. (6 pts) Calculate the total consumer surplus, total producer surplus, and monopoly profit.

c. (6 pts) Now assume the theater wants to charge a single, uniform price in both markets. Find the aggregate demand curve.

d. (6 pts) Calculate the uniform price charged and the total amount of tickets sold. Draw a graph for the market.

e. (6 pts) Calculate the total consumer surplus, total producer surplus, and monopoly profit with a uniform price.

f. (4 pts) Which pricing method does the producer prefer? Why?

g. (5 pts) Which pricing method leads to a higher total welfare? Why?

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