As a manager of a chain of movie theaters that are monopolies in their respective markets, you have noticed much higher demand on weekends than during the week. You therefore conducted a study that has revealed two different demand curves at your movie theaters. On weekends, the inverse demand function is P-25-0.0010, on weekdays, it is P-20-0.002Q You acquire legal rights from movie producers to show their films at a cost of $30,000 per movie, plus a $3.00 "royalty for each moviegoer entering your theaters (the average moviegoer in your market watches a movie only once). What type of pricing strategy should you consider in this case? Second degree price discrimination OFirst degree price discrimination Third degree price discrimination Block pricing

As a manager of a chain of movie theaters that are monopolies in their respective markets, you have noticed much higher demand on weekends than during the week. You therefore conducted a study that has revealed two different demand curves at your movie theaters. On weekends, the inverse demand function is P-25-0.0010, on weekdays, it is P-20-0.002Q You acquire legal rights from movie producers to show their films at a cost of $30,000 per movie, plus a $3.00 "royalty for each moviegoer entering your theaters (the average moviegoer in your market watches a movie only once). What type of pricing strategy should you consider in this case? Second degree price discrimination OFirst degree price discrimination Third degree price discrimination Block pricing

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter13: Between Competition And Monopoly

Section: Chapter Questions

Problem 5DQ

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As a manager of a chaln of movle theaters that are monopolles in their respective markets, you have noticed much higher demand on weekends than during the week. You therefore conducted a study that has revealed two different demand curves at your movle theaters. On weekends, the Inverse demand function is P= 25 - 0.001Q, on weekdays, It is P= 16 - 0.002Q You acquire legal rights from movie producers to show their films at a cost of $30,000 per movie, plus a $3.50 "royalty" for each moviegoer entering your theaters (the average movlegoer in your market watches a movie only once). What type of pricing strategy should you consider in this case? First degree price discrimination O Block pricing Third degree price discrimination Second degree price discrimination What price should you charge on weekends? Instructions: Enter your response rounded to two decimal places. What price should you charge on weekdays? Instructions: Enter your response rounded to two decimal places. %24
As a manager of a chain of movie theaters that are monopolies in their respective markets, you have noticed much higher demand on weekends than during the week. You therefore conducted a study that revealed two different demand curves at your movie theaters. On weekends the inverse demand function is PWeekend 15-0.001 QWeekend _ and on weekdays the inverse demand function is PWeekday 10 0.001 * QWeekday where Q is the number of movie goers and P is the price of a movie. You acquire legal rights from movie producers to show their films for $20,000 per movie, plus a $2 "royalty" for each movie-goer entering your theaters (the average moviegoer in your market watches a movie only once). MRWeekend 15 -0.002 QWeekend MRWeekday 10-0.002"QWeekday 1. What are the profit maximizing prices and quantities for Weekend and Weekday markets? 2. Draw the graphs of both the Weekend and Weekday markets and determine the optimum prices and quantities 3. What are the elasticities of demand for the Weekend…
b) The manager could have charged Joe a single price per round. How much extra profit does theclub earn by using two-part pricing?c) Joe marries Susan, who is also an enthusiastic golfer. Susan wants to join the Northlands Club.The manager believes that Susan’s inverse demand function is ? = 100 − 2?. The manager has apolicy of offering each member of a married couple the same two-part prices, so he offers themboth a new deal. What two-part pricing deal maximizes the club’s profit?d) Will this new pricing have a higher or lower access fee and per-unit fee than in Joe’s originaldeal? How much more would the club make if it charged Susan and Joe separate prices?
мсо 20 A profit-maximising firm produces homogenous (identical) units of output at a constant marginal cost and the units can be sold in two distinct market segments, which are segments A and B. On the assumption that the absolute value of the price elasticity of demand is lower in market segment A than it is in market segment B, if the firm decides to exercise price discrimination, we would expect to observe: A Ido not want to answer this question. В a higher price in market segment A to reflect the lower price elasticity the same price in both market segments since the marginal cost of production is the same for both markets and profits are maximised at MR = MC in both C markets D a higher price in market segment B to reflect the higher price elasticity E MR MC in market segment B because the higher elasticity allows a mark up of marginal revenue over marginal cost
As a manager of a music venue (assume a monopoly market), you have noticed much higher demand on weekends than during the week. You therefore conducted a study that has revealed two different demand curves at your theater. On weekends, the inverse demand function is P = 24 − 0.0005Q; on weekdays, it is P = 20 − 0.0025Q. Each night you hire an act to play costs about $75,000 for the band, and about $5.00 per person (staff, food, drinks). Devise a pricing strategy to maximize your firm's profits.
A manager of a nightclub realizes that demand for drinks is more elastic among students and is trying to determine the optimal pricing schedule. Specifically, he estimates the following average demand for his customer types: Under 25: qr =18-5p Over 25: q=10-2p The two age groups visit the nightclub in equal numbers on average. Assume that drinks cost the club $2 to make. If the manager can charge a separate entry fee and a price per drink for each group, what two-part price will the manager set for reach group. Now suppose that once again it is impossible to identify which group the customers belong. Suppose the manager lowers the price of drinks to equal to marginal cost and still wanted to attract both customers, what entry fee would the manager set? Compare the profits earned in parts a) to d). Which scheme would you choose if you could not identify customer type and which would you choose if you could identify customer type.
As a manager of a chain of movie theaters that are monopolies in their respective markets, you have noticed much higher demand on weekends than during the week. You therefore conducted a study that has revealed two different demand curves at your movie theaters. On weekends, the inverse demand function is P= 20 – 0.001Q, on weekdays, it is P= 15 - 0.002Q. You acquire legal rights from movie producers to show their films at a cost of $25,000 per movie, plus a $2.50 “royalty" for each moviegoer entering your theaters (the average moviegoer in your market watches a movie only once). What type of pricing strategy should you consider in this case? O Third degree price discrimination O Block pricing O First degree price discrimination O Second degree price discrimination What price should you charge on weekends? Instructions: Enter your response rounded to two decimal places. $ What price should you charge on weekdays? Instructions: Enter your response rounded to two decimal places.
Suppose the typical LA Rams fan has the following demand curve for Bills football games: P = 200 – 5G where G is the number of games the fans attend. Suppose the Bills have the chance to offer a various multi-game season ticket packages and tickets to individual games. If the Rams want to sell a particular fan single tickets to all eight home games, what price must they charge? $___ What should be the total price for a LA Rams 8-game season ticket package? $___ What should be the average ticket price for an LA Rams 4-game season ticket package? $___ Suppose the Rams have the opportunity to sell tickets to individual games. What price should they charge? $___
In a statement to Gillette’s shareholders, its CEO indicated, “Despite several new product launches, Gillette’s advertising-to-sales declined dramatically . . . to 7.5 percent last year. Gillette’s advertising spending, in fact, is one of the lowest in our peer group of consumer product companies.” If the elasticity of demand for Gillette’s consumer products is similar to that of other firms in its peer group (which averages –4), what is Gillette’s advertising elasticity? Is Gillette’s demand more or less responsive to advertising than other firms in its peer group? Explain
As a manager of a chain of movie theaters that are monopolies in their respective markets, you have noticed much higher demand on weekends than during the week. You therefore conducted a study that has revealed two different demand curves at your movie theaters. On weekends, the inverse demand function is P = 20 – 0.001Q; on weekdays, it is P = 15 – 0.002Q. You acquire legal rights from movie producers to show their films at a cost of $25,000 per movie, plus a $2.50 “royalty” for each moviegoer entering your theaters (the average moviegoer in your market watches a movie only once).
As a manager of a chain of movie theaters that are monopolies in their respective markets, you have noticed much higher demand on weekends than during the week. You therefore conducted a study that has revealed two different demand curves at your movie theaters. On weekends, the inverse demand function is P = 30 -0.002Q; on weekdays, it is P= 22 -0.002 Q. You acquire legal rights from movie producers to show their films at a cost of $30,000 per movie, plus a $3.50 "royalty" for each moviegoer entering your theaters (the average moviegoer in your market watches a movie only once). What type of pricing strategy should you consider in this case? O Block pricing O First degree price discrimination O Second degree price discrimination Ⓒ Third degree price discrimination What price should you charge on weekends? Instructions: Enter your response rounded to two decimal places. $ What price should you charge on weekdays? Instructions: Enter your response rounded to two decimal places. $
As a manager of a chain of movie theaters that are monopolies in their respective markets, you have noticed much higher demand on weekends than during the week. You therefore conducted a study that has revealed two different demand curves at your movie theaters. On weekends, the inverse demand function is P= 20 – 0.001Q; on weekdays, it is P= 12 – 0.002Q. You acquire legal rights from movie producers to show their films at a cost of $25,000 per movie, plus a $3.00 “royalty" for each moviegoer entering your theaters (the average moviegoer in your market watches a movie only once). What type of pricing strategy should you consider in this case? O First degree price discrimination O Third degree price discrimination O Second degree price discrimination O Block pricing What price should you charge on weekends? Instructions: Enter your response rounded to two decimal places. What price should you charge on weekdays? Instructions: Enter your response rounded to two decimal places.