Assume a two consumer world: The demand for consumer 1 is: P = 100 – Q...

Assume a two consumer world: The demand for consumer 1 is: P = 100 – Q The demand for consumer 2 is: P = 90 – Q MC = ATC = $12 The current price is $12 a. Assume a firm charges each person the maximum entrance fee. What would each person pay? b. Assume a firm charges each person the same entrance fee what would each person pay? c. Assume the entrance fee is the same for each person and the firm also decides to charge a $20 price. What entrance fee should the firm charge each person? How much is the firm’s profit? Is the profit higher or lower than in question b above? How much higher or lower?

Expert Solution

optimal entrance fee is equals to the consumer surplus in order to get all extra amount from consumers !

Rahul Sunny answered 2 years ago

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