The movie distributor charges a movie theatre $ 8 per ticket to watch a movie. Suppose the theatre can seat a maximum of 1,900 people. The demand for the movie is different for the afternoon showing and for the evening showing. Based on the demand function :
P = 80 – Q/40 for the evening showing,
P = 40 – Q/40 for the afternoon showing and
The marginal-revenue function for the
evening is MR = 80 – Q/20
afternoon is MR = 40 – Q/20
Calculate the profit-maximizing price in the evening ____________ and the afternoon; ____________ also calculate how many tickets will be sold for each show.
evening ____________
afternoon;____________
Suppose that the movie distributor now charges a flat fee of 2,600 to show the movie regardless of the number of tickets sold. Will the movie theatre owner prefer this arrangement? _________