The movie distributor charges a movie theatre $4 per ticket to rent a movie.Suppose the theatre can seat a maximum of 200 people.The demand for the movie is different for the afternoon showing and for the evening showing.Based on the demand function P = 10 - Q/10 for the afternoon showing and P = 20 - Q/10 for the evening showing,the marginal-revenue function for the afternoon is MR = 10 - Q/5 and for the evening is MR = 20 - Q/5.
a.Calculate the profit-maximizing price in the evening and the afternoon; also calculate how many tickets will be sold for each show.
b.Suppose that the movie distributor now charges a flat fee of $1000 to show the movie regardless of the number of tickets sold.Will the movie theatre owner prefer this arrangement

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The Answer of The movie distributor charges a movie theatre $4 per ticket to rent a movie.Suppose the theatre can seat a maximum of 200 people.The demand for the movie is different for the afternoon showing and for the evening showing.Based on the demand function P = 10 - Q/10 for the afternoon showing and P = 20 - Q/10 for the evening showing,the marginal-revenue function for the afternoon is MR = 10 - Q/5 and for the evening is MR = 20 - Q/5.
a.Calculate the profit-maximizing price in the evening and the afternoon; also calculate how many tickets will be sold for each show.
b.Suppose that the movie distributor now charges a flat fee of $1000 to show the movie regardless of the number of tickets sold.Will the movie theatre owner prefer this arrangement

The Movie Distributor Charges a Movie Theatre $4 Per Ticket