Please pay careful attention to the questions. You must answer exactly as asked. Please insert the answers in this document. Screenshots of computer programs solutions can be inserted in the document, but you must provide the exercise completed in the computer program used to get the solution.

Exercise 1

A movie theater shows films for a community of 700 people shows films during weekends. Right now, the price per ticket is $17.50. In the past, when they increased or decreased the price per ticket, they discovered that for every dollar (or fraction) that the price was increased or decreased, the attendance decreased or increased proportionally by 20 people. The theater owner pays the Film Distribution Company $10 (incremental cost) in royalties per person who views the film. Find

1. The willingness-to-pay distribution of the movie goers.
2. The average price they would be willing to pay.
3. The price per ticket that maximizes revenue.
4. Should the theater owner increase or decrease the price per ticket if she wants to maximize contribution?
5. Find the consumer surplus if the tickets are priced at the price that maximizes contribution.