Plato Playhouse,a theatre company in the university town of Wegg,caters to two groups of customers: students and the non-student population.Figure 16-2 shows the demand curves for the two groups of customers.
-Refer to Figure 16-2.What is the price charged in the two markets?
A)price in the student market = price in the non-student market = Pa
B)price in the student market = price in the non-student market = Pb
C)price in the student market = Pd;price in the non-student market = Pe
D)price in the student market = Pc;price in the non-student market = Pe

Question

Plato Playhouse,a theatre company in the university town of Wegg,caters to two groups of customers: students and the non-student population.Figure 16-2 shows the demand curves for the two groups of customers.
-Refer to Figure 16-2.What is the price charged in the two markets?
A)price in the student market = price in the non-student market = Pa 
B)price in the student market = price in the non-student market = Pb 
C)price in the student market = Pd;price in the non-student market = Pe 
D)price in the student market = Pc;price in the non-student market = Pe

Quizplus · Accepted Answer

The price charged in the student market is Pc and the price charged in the non-student market is Pe, as shown by the points where each market's demand curve intersects with the marginal cost curve. Therefore, D is the correct answer. Option A and B are incorrect because both markets have different demand curves and hence different equilibrium prices. Option C is also incorrect because it assumes that the price in the student market is higher than the price in the non-student market, which is not necessarily true based on the given demand curves.

Plato Playhouse,a Theatre Company in the University Town of Wegg,caters