Question

A fast-food restaurant has identified three primary groups willing to purchase its meals. However, customers are willing to purchase only one meal each. The table shows the total number of meals bought at three different prices. The number of consumers is the total number of buyers at each price level.

Group	Number of consumers	Willingness to pay
High	350	$5
Medium	500	$4
Low	750	$2

The restaurant can produce a meal with no fixed costs and a constant marginal cost of $1 per unit.

1st attempt

Part 1   (2 points)

If the restaurant charges only one price for the meal, it will charge   $--- and receive a profit of   $ -----.

Part 2   (2 points)

Assume the firm can distinguish between customers and has the ability to charge different customers different prices. If the restaurant can perfectly price-discriminate, the highest price it will charge is   $ ----- . The total profits under perfect price discrimination are   $ ----- .

Part 3   (2 points)

Assume the firm can distinguish between customers and has the ability to charge different customers different prices. If the restaurant charges two prices, it will charge $-----and $-------.

and receive a profit of   $-------.

Answer 1