The table lists the highest prices five consumers are willing to pay for a theater ticket. If the price of one ticket falls from $25 to $10, A. consumer surplus increases from $0 to $31. B. only three tickets will be sold. C. everyone will buy a ticket. D. consumer surplus decreases from $24 to $12.
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Consumer surplus is the difference between the highest price a consumer is willing to pay and the actual price they pay. Show more…
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The Collegetown movie theater serves 900 students and 100 professors in town. Each student's willingness to pay for a movie ticket is $\$ 5 .$ Each professor's willingness to pay is $\$ 10 .$ Each will buy only one ticket. The movie theater's marginal cost per ticket is constant at $\$ 3,$ and there is no fixed cost. a. Suppose the movie theater cannot price-discriminate and charges both students and professors the same price per ticket. If the movie theater charges $\$ 5,$ who will buy tickets and what will the movie theater's profit be? How large is consumer surplus? b. If the movie theater charges $\$ 10,$ who will buy movie tickets and what will the movie theater's profit be? How large is consumer surplus? c. Assume the movie theater can price-discriminate between students and professors by requiring students to show their student ID, charging students $\$ 5$ and professors $\$ 10$, how much profit will the movie theater make? How large is consumer surplus?
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