| Consider a movie theater monopolist who faces the same demands from students and other adults as the monopolist in Worked-Out Problem 18.2 (page 635) but who has cost function C(Q) = Q + 0.005Q2with marginal cost MC = 1 + 0.01Q, where Q is the total number of tickets sold (equal to the sum of student of student tickets and other adult tickets). What is the monopolist’s best price if discrimination is not possible? What are best prices if discrimination is possible? What is the effect of discrimination on aggregate surplus? On consumer surplus? What would happen to the student price under price discrimination if the demand of other adults increases to QdA = 1,800 – 100P? Why? |
