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The Grand Theater is a movie house in a medium-sized college town. This theater shows unusual films and treats early-arriving movie goers to live organ music and Bugs bunny cartoons. If the theater is open, the owners have to pay a fixed nightly amount of $500 to show a film. In addition, the movie house incurs an additional cost of two dollars for each person that attends a movie. For simplicity, assume that if the theater is closed, its costs are zero. The nightly demand for Grand Theater movies by students is Qs = 220 - 40Ps, where Qs is the number of movie tickets demanded by students at price Ps. The nightly demand for nonstudent moviegoers is QN= 140-20PN. If the Grand Theater charges a single price, PT, to everybody, then at prices between 0 and $5.50:

(a) the aggregate demand function for movie tickets is QT =

(b) What is the profit-maximizing number of tickets for the Grand Theater to sell if it charges one price to everybody?

(c) At what price would this number of tickets be sold?

(d) How much consumer surplus do the students obtain when there is a uniform price?

(e) How much profits would the Grand make?

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9689888

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