A cinema knows near a university knows that there are two types of consumers: regular people...

A cinema knows near a university knows that there are two types of consumers: regular people and students. Ordinary people have an aggregate demand curveof? = 10−p/3 while students have an aggregate demand curve of? = 10–2p/3. The marginal cost of the cinema is zero.

a) Suppose students can be separated from other people by their student id, and the cinema charges each group of consumers a different price. What prices would the cinema charge?

b) Suppose the cinema cannot price discriminate. What would be the market price and quantity sold to each group of customers?

c) How much does the cinema gain from price discrimination?

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Expert Solution

Rahul Sunny answered 2 months ago

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