1) A lower east-side cinema charges $3.00 per ticket for children under 12 years of age and $5.00 per ticket for anyone 12 years of age or older. The firm has estimated that the price elasticity of demand for tickets purchased by those 12 years of age or older is -1.5. Calculate the elasticity of demand for tickets purchased for children under 12 years of age if prices are optimal. 2) The local zoo has hired you to assist them in setting admission prices. The zoo's managers recognize that there are two distinct demand curves for zoo admission. One demand curve applies to those ages 12 to 64, while the other is for children and senior citizens. The two demand and marginal revenue curves are: PA = 9.6 - 0.08QA MRA = 9.6 - 0.16QA PCS = 4 - 0.05QCS MRCS = 4 - 0.10QCS where PA = adult price, PCS = children's/senior citizens' price, QA = daily quantity of adults, and QCS = daily quantity of children and senior citizens. Crowding is not a problem at the zoo, so that the managers consider marginal cost to be zero. a. If the zoo decides to price discriminate, what are the profit maximizing price and quantity in each market? Calculate total revenue in each sub-market. b. What is the elasticity of demand at the quantities calculated in (a) for each market. Are these elasticities consistent with your understanding of profit maximization and the relationship between marginal revenue and elasticity? 3) The industry demand curve for a particular market is: Q = 1800 - 200P. The industry exhibits constant long-run average cost at all levels of output, regardless of the market structure. Long-run average cost is a constant $1.50 per unit of output. Calculate market output, price (if applicable), consumer surplus, and producer surplus (profit) for each of the scenarios below. Compare the economic efficiency of each possibility. a. Perfect Competition b. Pure Monopoly (Hint: MR = 9 - 0.01Q) c. First Degree Price Discrimination