You are the owner of a concert venue at which the very popular band "Rolling Beatles" is scheduled to perform. You alone are in charge of setting prices, although government regulations require that for some reason (fairness?) every seat be sold for the same price. You are keenly aware of the fact that you will earn zero revenue on any seats that go unsold, and are trying to maximize profit by filling up your venue. You consult an economist friend of yours, and he says you would be silly to try to sell out the concert. Explain carefully what your economist friend might be thinking, and why your profits will likely be higher if you intentionally set the price to leave your venue partly empty.

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Your economist friend might be thinking about the concept of price discrimination Price discriminati... View the full answer