Question
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.
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 agoRelated Solutions
Suppose seven individuals enjoy going to the comedy club. Their demand is as follows. Person Willingness...
Suppose seven individuals enjoy going to the comedy club. Their demand is as follows.
Person
Willingness to pay
Allison
60
Beatrice
54
Cally
48
David
42
Ezekiel
36
Francesca
30
Gertrude
24
If the comedy club had a monopoly and a marginal cost of $7 per entrant, the comedy club would sell_____ tickets if it could charge only one price.
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Gem E. Fallon LLP (GEF) is currently evaluating an investment in a new comedy club. The...
Gem E. Fallon LLP (GEF) is currently evaluating an investment in
a new comedy club. The club is expected to last for 4 years and
generate a CF1 = $11,000, CF2 = $9,680, CF3 = $10,648, and CF4 =
$58,564. The initial outlay is $20,000. Using a required return of
10%, calculate the discounted payback period for
GEF's comedy club. (All answers below are expressed in years.)
(a) 2.19
(b) 2.25
(c) 2.00
(d) 1.93
(e) 3.00
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