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Cinema Barn is a rustic looking movie house in a medium-sized college town. To operate, the cinema owners must pay a fixed nightly amount of

Cinema Barn is a rustic looking movie house in a medium-sized college town. To operate, the cinema owners must pay a fixed nightly amount of $100 for films, ushers, and so on, regardless of how many people come to watch a movie. For simplicity, assume that if the cinema is closed, its costs are zero. The nightly demand for Cinema Barn screenings by students is = 200 40, where is the number of movie tickets demanded by students at price . The nightly demand for non-student moviegoers is = 140 10. a. [4] If Cinema Barn charges a single price, , to everybody, what is the aggregate demand for movies? (Hint: Consider reservation prices for viewing films.) b. [8] What is the profit-maximizing number of tickets for the cinema to sell if it charges one price to everybody? What would its profit be? c. [10] If Cinema Barn could perfectly sort moviegoers into the two groups by requiring that they show student IDs (assume no ticket reselling by students and no fake student IDs for non-students), would Cinema Barn want to price discriminate? Why is it important that ticket reselling is not occurring?

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