Question

2.You are in charge of pricing tickets for an upcoming event at the outdoor amphitheater where all seating is by general admission(no assigned seats). Demand for the event can be segmented into students and non-students. Student demand is Qst=10,000-100P. Nonstudent demand can be expressed as Qns=5000-10P. Your marginal cost per attendee is $10 and is constant. The capacity of the amphitheater is 5000. Since you can check for a student ID, you can charge each group a different price. What price do you charge each group?

Answer 1

Equilibrium is attained where MR = MC

Student should pay $ 55 while non-student should pay 255.