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. Should the firm adopt the single price policy or the student discount policy?
A) the single price policy because the firm does not meet the three conditions necessary to engage in price discrimination
B) the single price policy because price discrimination would not be legal for this firm
C) the single price policy because it is more profitable than price discrimination for this firm
D) the student discount policy because it is more profitable than the single price policy

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. Should the firm adopt the single price policy or the student discount policy?
A) the single price policy because the firm does not meet the three conditions necessary to engage in price discrimination 
B) the single price policy because price discrimination would not be legal for this firm 
C) the single price policy because it is more profitable than price discrimination for this firm 
D) the student discount policy because it is more profitable than the single price policy

Quizplus · Accepted Answer

The student discount policy is considered more profitable because it allows the theater to capture a larger portion of the market by offering lower prices to a sensitive segment (students) while charging a higher price to those less sensitive to price changes. This form of price discrimination can increase overall revenue and profit when correctly implemented.

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