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In: Economics

Suppose seven individuals enjoy going to the comedy club. Their demand is as follows. Suppose the...

Suppose seven individuals enjoy going to the comedy club. Their demand is as follows.
Person Willingness to pay Allison Beatrice Cally David Ezekiel Francesca Gertrude 40 36 32 28 24 20 16

Suppose the comedy club had a monopoly and a marginal cost of $7 per entrant. Suppose the club could perfectly price-discriminate. That is, it could charge each customer a different price equal to his or her maximum willingness to pay. How many tickets would the comedy club sell?   

Solutions

Expert Solution

The club will sell tickets at a price that is higher than its marginal cost. So, the minimum ticket price is $7. Since all consumers have a willingness to pay that is higher than $7, charging a price of, for example $8, will make all the consumers purchase a ticket. Therefore,

Club will sell 7 tickets.

Rahul Sunny answered 2 years ago
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