Customers to Live Theaters, Inc. can be divided into two groups: seniors and everyone else. The inverse
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Customers to Live Theaters, Inc. can be divided into two groups: seniors and everyone else. The inverse demand curves for each of the two groups are given below. The marginal cost (which equals the average variable cost) of serving an additional patron, either senior or everyone else, is equal to $4. Fixed costs are equal to $1000.
Ps = 80 – Qs
Pe = 100 – 2Qe
Where Ps and Pe denote, respectively, the prices charged to seniors and everyone else and Qs and Qe denote the number of seniors and the number of all other customers served.
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Related Book For
Industrial Organization Markets and Strategies
ISBN: 978-1107069978
2nd edition
Authors: Paul Belleflamme, Martin Peitz
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