Table 7.2
-Table 7.2 contains price, demand, and cost data for the Capri Theater, the only first-run movie theater in a small town. What is its total profit under the single price policy?
A) $300
B) $360
C) $450
D) $540

Question

Table 7.2
-Table 7.2 contains price, demand, and cost data for the Capri Theater, the only first-run movie theater in a small town. What is its total profit under the single price policy?
A) $300 
B) $360 
C) $450 
D) $540

Quizplus · Accepted Answer

Under the single price policy, the profit-maximizing output occurs where MR=MC. From the table, we can see that the profit-maximizing output is 120 tickets at a price of $6. At this output level, the total revenue is $720 (120 x $6), total cost is $270 ($100 + $40 + $60 + $70), and total profit is $450 ($720 - $270). Therefore, the best choice is C.

Table 7.2 -Table 7.2 Contains Price, Demand, and Cost Data for the for the Capri