Question

Question 1.b. Assume that you are hired by a movie theatre to re-assess discounts that apply to students and senior citizens. Then, proceed as follows:
(a) Indicate what sort of data you will require to perform your analysis.
(b) Carefully explain with an appropriate model how the profit-maximising price in each market is to be set.
(c) With your own numerical example, analyse how the discounts should be determined knowing the profit-maximising prices.

Answer 1

a) if I have been appointed to re-asses the discount for students and senior citizens then I need the data of students and senior citizens visiting the theater per week. Also, I would like to have the data on the type of cinema they jointly or separately would like to visit. here I have two special categories of customer who have a specific choice so all my decision depends on the basis of data.

b) Here this is a specific and monopoly market of theatre, that provides discriminating facilities to its special customer. this is also considered as price discriminating and product discriminating monopoly. for example, if the movie is an animated science fiction base then more student-oriented so if I will concentrate on student categories with discount I can make more profit. similarly for senior citizens also.

c) for example if I will operate one price then the expected profit is OPAX (3000). But, if I will discriminate the price between two different category customer then the profit will be OP1FX1(1000) and the other one will provide a profit of OP2GX2 (2500). so by combining both OP1FX1+OP2GX2 (3500)> OPAX(3000).