Cover Charges: Hank's Honkytonk is a local bar and nightspot. On weekends, it requires a $5 cover charge to defray the costs of the live musical acts Hank brings in. This has worked wonderfully, as it generates capacity crowds and a long line of people waiting to enter.
Question: Explain the economic significance of charging a $5 cover for the live musical acts. Provide example of two pricing or product differentiation changes (explain how) that could increase his profitability.