1. Lengthy Textiles Inc. has two types of customers. One only wears red scarves and has demand function QR = 100 - P. The other only wears blue scarves and has demand function QB = 100 - 0.5P. The total cost of serving Q = QR + QB consumers is C = 6,000. Assuming Lengthy Textiles can price discriminate between these customers, what are the optimal prices to charge, respectively, to customers wearing red scarves and blue scarves? A. P = 10 for both red scarves and blue scarves. B. P = 30 for red scarves, and P = 15 for blue scarves. C. P = 50 for red scarves, and P = 100 for blue scarves. D. P = 60 for red scarves, and P = 120 for blue scarves.

2. The Puritan Wellness Hotel sits next to the natural springs in the Silver Forest. Local firm Refectio Deorum (RD) bottles mineral water only from this source. Guests of the Puritan can bathe in the springs, and are charged for the privilege. The inverse demand function is P = 50 - Q, where Q is the number of daily bathers who purchase the pass to the springs. The Puritan incurs no costs when its guests use the springs, but RD estimates that every bather adds $20 in daily filtering expenses. What is the privately optimal number of bathing passes to sell for the Puritan, and what is the socially optimal number of passes? A. Privately optimal is 25 passes; socially optimal is 15 passes. B. Privately optimal is 40 passes; socially optimal is 75 passes. C. Privately optimal is 100 passes; socially optimal is not to bathe at all. D. The optimal number of hours, privately as well as socially, is 50.

3. The Actresses' and Actors' Ball is an annual event in Stadtlandia. In addition to the ticket price of $120, a guest who attends the Ball, on average, brings an extra $30 in profits to businesses based in Stadtlandia. Attracting Q guests requires promotional spending of 0.1Q2 by the organizers. All other costs of hosting the Ball are covered by sponsoring. Suppose that the parties can engage in Coasian bargaining over the number of attendees. How does the outcome depend on which party initially has the right to decide the attendance of the Ball? A. If the organizers have the right, there will be 500 attendees; if the city's businesses have the right, there will be no attendees. B. If the organizers have the right, there will be no attendees; if the city's businesses have the right, there will be 1,250 attendees. C. If the organizers have the right, there will be 750 attendees; if the city's businesses have the right, there will also be 750 attendees. D. If the organizers have the right, there will be 1,000 attendees; if the city's businesses have the right, there will also be 1,000 attendees.