1. Seven potential customers are interested in seeing a movie. Because the marginal cost of admitting additional customers is zero, the movie theater maximizes its profits by maximizing its revenue.

a. What price would the theater charge if it could charge only one price?

b. If the theater could charge two prices, what prices would it choose? Which customers would pay the higher price, and which would pay the lower price?

c. How much profit does the theater make when it charges only one price? How much profit does the theater make if it price-discriminates?

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Maximum Customer willingness to pay Age Allison $8 66 Becky 11 34 Charlie 6 45 David 7 16 Erin 6 9 Franco 10 28 Grace 9 14