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Please help to solve this MCQ. Detailed explanations for each option (why it's correct or wrong) are required. Thanks! 7. Cinemax Inc. is the only

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Please help to solve this MCQ.

Detailed explanations for each option (why it's correct or wrong) are required.

Thanks!

image text in transcribed
7. Cinemax Inc. is the only movie theatre in town and acts as a monopolist. There are two groups of consumers: pensioners and students. Cinemax can set a different price for each of these groups. The inverse demand for movies of pensioners is P\" (y) and the inverse demand for movies of students is P5(y). Suppose that the demand of pensioners is higher than the demand of students, i.e., Pp(y) > P5(y) for all levels of y. a) Cinemax must optimally set a higher price for pensioners than for students. b) Cinemax must optimally set a higher price for students than for pensioners. c) It is possible for Cinemax to optimally set an equal price for pensioners and students. d) Without information on the marginal cost of Cinemax, no comparison of the optimal pricing for the two groups can be made

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