Suppose there is a movie monopolist selling to students, adults, and seniors. The marginal cost of tickets is fixed at $7.00. The demand functions can be expressed as:
Q_s^d=1250-25P
Q_A^d=2000 -25P
Q_n^d=1500 -25P
–What prices will a monopolist set when it can discriminate? How much profit will the firm make?
–Suppose the firm would rather set up a two part tariff. What price would it charge students (in aggregate) while still keeping adults and seniors as customers? How much profit would it make?