A night-club owner has both student and adult consumers. The demand for drinks by a typical student is QS=24-4P. The demand for drinks by a typical adult is QA=8-P. There are equal numbers of students and adults. The marginal cost of each drink is $2.
a. what price will the club owner set if it is not possible to discriminate between the two groups? What will the total profit be at this price?
b. if the club owner could separate the groups and practice third-degree price discrimination, what price per drink would be charged to members of each group? what would be the club owner's profit in this case?
c. if the club owner can "card" patrons and determine who among them is a student and who is not, and in turn can serve each group by offering a cover charge and a number of drink tokens to each group, what will the cover charge and number of tokens be for students? what will be the cover charge and number of tokens give to adults? what is the club owner's profit under this regime?