N6

1. if the maximum willingness to pay for the movie theatre is distributed between $10 and $30 what is its distribution function

A. X/40

B. X/30

C.X/20

D. X/10

2. If the weekly market size is 5000 customers what is demand function

A.d=7500-500p

B.=8000-200p

C.=7500-250p

D.=30000-1000p

3. Now assume that maximum willingness to pay instead of being uniformly distributed is linear of shape w(x)= x/200. Assume the maximum willingness to pay and market size stay the same as $30 and 5000 respectively. What is demand function

A.11250-12.5^2

B. 18000-20p^2

C.16000-10p^2

D. 5625-25p^2

4. Given the values and results in the previous question what is the lower bound of maximum willingness to pay

Hint: there are two ways to solve the problem 1) you set the demand function equal to market size and solve for price to get the lower bound of max wtp

2) The area under the wtp distributionfunction between the lower and upper bounds should be equal to 1

A. $20.

B. $31.62

C.$22.36

D. $5