Suppose we have 5 people who might attend up to 2 theatre shows at the local theatre. There’s a drama and a comedy. The marginal cost of a seat on any given night is both constant and negligible (you can safely ignore it), so profit maximization and revenue maximization amount to the same thing. Below are the maximum willingness to pay values (a person will pay a price up to that value, but no greater) for a seat for each of the 5 people for the two shows. The theatre is a profit-maximizing firm. What individual ticket price (i.e., the price for anybody attending the show would be the same, but it could be different across shows) would separately maximize profit for each show?
Suppose we have 5 people who might attend up to 2 theatre shows at the local theatre. There’s a drama and a comedy. The marginal cost of a seat on any given night is both constant and negligible (you can safely ignore it), so profit maximization and revenue maximization amount to the same thing. Below are the maximum willingness to pay values (a person will pay a price up to that value, but no greater) for a seat for each of the 5 people for the two shows. The theatre is a profit-maximizing firm. What individual ticket price (i.e., the price for anybody attending the show would be the same, but it could be different across shows) would separately maximize profit for each show?
Economics Today and Tomorrow, Student Edition
1st Edition
ISBN:9780078747663
Author:McGraw-Hill
Publisher:McGraw-Hill
Chapter3: Your Role As A Consumer
Section3.3: Consumerism
Problem 5R
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Suppose we have 5 people who might attend up to 2 theatre shows at the local theatre. There’s a drama and a comedy. The marginal cost of a seat on any given night is both constant and negligible (you can safely ignore it), so profit maximization and revenue maximization amount to the same thing. Below are the maximum willingness to pay values (a person will pay a price up to that value, but no greater) for a seat for each of the 5 people for the two shows.
The theatre is a profit-maximizing firm. What individual ticket price (i.e., the price for anybody attending the show would be the same, but it could be different across shows) would separately maximize profit for each show?
Transcribed Image Text:Comedy
$20
$50
$90
$105
$140
Person
Drama
$130
$125
Anu
Bao
$110
$65
$40
Curtis
Devid
Emma
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