A summer theater has a capacity of 200 seats for its Saturday evening concerts. The marginal cost

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A summer theater has a capacity of 200 seats for its Saturday evening concerts. The marginal cost of admitting a spectator is zero up to that capacity. The theater wants to maximize profits and recognizes that there are two kinds of customers. It offers discounts to senior citizens and students, who generally are more price sensitive than other customers. The demand curve for tickets by seniors and students is described by P1 = 16 - 0.04Q1, where Q1 is the number of discount tickets sold at a price of P1. The demand schedule for tickets by customers who do not qualify for a discount is represented by P2 = 28 - 0.1Q2, where Q2 is the number of nondiscount tickets sold at a price of P2. What are the two prices that would maximize profit for the Saturday evening concerts?
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Microeconomics

ISBN: 978-0073375854

2nd edition

Authors: Douglas Bernheim, Michael Whinston

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