5.

Senior Discounts

:

See page 164 of chapter 13. You will need to construct a couple tables like 13.1 and

13.2. Also, you should refer back to the earliest version of the table in chapter six (table 6.4).

Doug's Delicious Diner faces a demand curve for its daily special in which there 11 potential buyers at

every $0.20 price level from $8.00 to $6.00.

1

i.) Assuming that the marginal cost is a constant $6.35 per unit, what price maximizes profits?

ii.) Doug notices that the customers who choose

not

to buy at the profit-maximizing price all share

a common attribute: they are all senior citizens! If he offered a senior discount price, how

much should it be?