Suppose You Are the Monopoly Owner of a Movie Theatre

Suppose you are the monopoly owner of a movie theatre.You can allow people to enter the theatre at zero marginal cost,and you can provide popcorn at a constant marginal cost of $0.50 per bag.You have two customers,Larry and Terry,who are identical twins.Larry never buys popcorn under any circumstances.If you charge the monopoly price of $1.00 per bag for popcorn,Terry will buy 2 bags of popcorn and earn $0.50 in consumer's surplus,and you will earn $1.00 in profit from popcorn sales.If you charge the competitive price of $0.50 per bag for popcorn,Terry will buy 4 bags of popcorn and earn $2.00 in consumer's surplus,and you will earn no profit from popcorn sales.