Ivan runs a small independent movie theatre in Scarborough, which presently attracts 1,100 customers per week at a ticket price of $7. His customer base comprises 750 adult customers and 350 seniors. He would like to increase his total revenue by practising price discrimination. He knows that the demand by adults is fairly inelastic and that a change in the admission price of $1 would change the quantity by 60 customers. He also recognizes that the demand by seniors is fairly elastic and a $1 change in the price would result in a change of 40 customers. Adults Seniors Price Quantity Total Revenue Quantity Total Revenue $2 $ $ 3 4 5 6 7 8 9 a. From this information, complete the table above. b. What is Ivan’s present total revenue? Total revenue: $ c. Should he increase or decrease the price for adults? Should he increase or decrease the price for seniors? Adults: (Click to select) Increase Decrease Seniors: (Click to select) Decrease Increase d. What price will maximize the total revenue from adult customers? Adult price: $ e. What price will maximize the total revenue from seniors? Seniors’ price: $ f. What will be the total revenue from both groups? Total revenue: $ Total revenue from adults: $ Total revenue from seniors: $
Ivan runs a small independent movie theatre in Scarborough, which presently attracts 1,100 customers per week at a ticket price of $7. His customer base comprises 750 adult customers and 350 seniors. He would like to increase his total revenue by practising
| Adults | Seniors | |||
| Price | Quantity | Total Revenue | Quantity | Total Revenue |
| $2 | $ | $ | ||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| 7 | ||||
| 8 | ||||
| 9 |
a. From this information, complete the table above.
b. What is Ivan’s present total revenue?
Total revenue: $
c. Should he increase or decrease the price for adults? Should he increase or decrease the price for seniors?
Adults: (Click to select) Increase Decrease
Seniors: (Click to select) Decrease Increase
d. What price will maximize the total revenue from adult customers?
Adult price: $
e. What price will maximize the total revenue from seniors?
Seniors’ price: $
f. What will be the total revenue from both groups?
Total revenue: $
Total revenue from adults: $
Total revenue from seniors: $
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