Roxie's Movie Theatre has a monopoly and discovers that at $12 a movie, no one is buying movie tickets during weekdays. Roxie's conducts a survey and the table above reveals the results of the survey. Roxie decides to price discriminate between weekend and weekday moviegoers. The marginal cost of showing a movie is $6. Roxie's charges _______ on weekdays and _______ on weekends.
A) $3; $12
B) $6; $15
C) $9; $12
D) $6; $18

Question

Quizplus · Accepted Answer

Roxie's will charge a price above marginal cost to maximize profit. On weekdays, to attract customers, the price needs to be lower than $12. Since the marginal cost is $6, charging $9 covers the marginal cost and provides a profit. On weekends, demand is higher, so Roxie's can charge the original price of $12 without losing customers.

Roxie's Movie Theatre Has a Monopoly and Discovers That at $12