Microeconomics (9th Edition) (Pearson Series in Economics)
9th Edition
ISBN: 9780134184241
Author: Robert Pindyck, Daniel Rubinfeld
Publisher: PEARSON
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Question
Chapter 4, Problem 7E
(a)
To determine
The quantity of tickets demanded.
(b)
To determine
The price
(c)
To determine
The maximization of revenue.
(d)
To determine
The price that maximizes the revenue.
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The director of a theater company in a small college town is considering changing the way he prices tickets. He has hired an economic consulting firm to estimate the demand for tickets. He has hired an economic consulting firm to estimate the demand for tickets. The firm has classified people who go to the theater into two groups and has come up with two demand functions. The demand curves for the general public (Qgp) and students (Qs) are given asΒ Β Β Β Qgp = 2,000 β 10PΒ Β Β andΒ Β Β Β Β Qs = 800 β 8PΒ Β Β Β Β Β Β Β Β
Β
a) Graph the two demand curves on one graph, with P on the vertical axis and Q on the horizontal axis. If the current price of tickets is $70, identify the quantity demanded by each group.
b) Find the price elasticity of demand for each group at the current price and quantity.
c) Is the director maximizing the revenue he collects from ticket sales by charging $70 for each ticket? Explain.
d) What price should he charge each group if he wants to maximize revenue collected fromβ¦
Before 1981, customers visiting Disneyland purchased "ticket books" and
paid for each attraction individually. On June 20, 1981, Disneyland began
offering an "all-inclusive pass" that allowed guests unlimited use of all
attractions. Duncan is planning a trip to Disneyland and has an inverse
demand curve of P = 4 -0.2Q (or Q = 20 - 5P), where Q is the quantity of
attractions and P is the price per attraction.
Given Duncan's demand curve, what is the most Duncan would be willing
to pay for Disneyland's "all-inclusive pass" that allows for unlimited use of
all attractions? (That is, the "all-inclusive pass" is a fixed fee and all
individual attractions are "free".)
$20
$40
$80
$100
None of the above answers are correct.
The director of a theater company in a small college town is considering changing the
way he prices tickets. He has hired an economic consulting firm to estimate the demand
for tickets. The firm has classified people who go to the theater into two groups and has
come up with two demand functions. The demand curves for the general public (Qgp)
and students (Qs) are given below:
Qgp
Qs = 200 - 4P
= 500 - 5P
Find the price elasticity of demand for each group at the current price and
quantity.
Is the director maximizing the revenue he collects from ticket sales by charging
$35 for each ticket? Explain.
What price should he charge each group if he wants to maximize revenue
collected from ticket sales?
Chapter 4 Solutions
Microeconomics (9th Edition) (Pearson Series in Economics)
Ch. 4.A - Prob. 1ECh. 4.A - Prob. 2ECh. 4.A - Prob. 3ECh. 4.A - Prob. 4ECh. 4.A - Prob. 5ECh. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQ
Ch. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - Prob. 9RQCh. 4 - Prob. 10RQCh. 4 - Prob. 11RQCh. 4 - Prob. 12RQCh. 4 - Prob. 1ECh. 4 - Prob. 2ECh. 4 - Prob. 3ECh. 4 - Prob. 4ECh. 4 - Prob. 5ECh. 4 - Prob. 6ECh. 4 - Prob. 7ECh. 4 - Judy has decided to allocate exactly 500 to...Ch. 4 - The ACME Corporation determines that at current...Ch. 4 - Prob. 10ECh. 4 - Prob. 11ECh. 4 - Prob. 12ECh. 4 - Prob. 13ECh. 4 - Prob. 14ECh. 4 - Prob. 15ECh. 4 - Prob. 16E
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