Question: Question 1: Please review the AJC article dated 27 March 2014, U.S. Movie Theaters Might Cut Ticket Prices. (Note, the article is posted in the

 Question 1: Please review the AJC article dated 27 March 2014,
"U.S. Movie Theaters Might Cut Ticket Prices". (Note, the article is posted

Question 1: Please review the AJC article dated 27 March 2014, "U.S. Movie Theaters Might Cut Ticket Prices". (Note, the article is posted in the same file as the exam.) Assume you own a movie theater in a small town and you have no other competition. Given that you observe much greater demand on the weekends than weekdays you think charging a differential price might be a good strategy. You therefore conducted a study that has revealed two different demand curves at your movie theater. On weekends, the inverse demand function is P=15 - 0.0010; on weekdays, it is P=10-0.001Q. You acquire the legal rights from movie producers to show their film at a cost of $15,000 per movie, plus a $2 "royalty" for each moviegoer entering your theater (the average moviegoer in your area only watches a movie once). Given this information, devise a pricing strategy to maximize your firm's profits. What price(s) would you charge

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!