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The gure illustrates the demand at a pizza franchise. Suppose that there are 10,000 customers with identical demands. Each customer will visit the pizza shop
The gure illustrates the demand at a pizza franchise. Suppose that there are 10,000 customers with identical demands. Each customer will visit the pizza shop once a year and buy either one, two, or three pizzas. Each customer is willing to pay some price between $14.00 and $13.00 for the first pizza (so some will pay $13.50, others will pay $13.25, and so on), between $13.00 and $12.00 for the second pizza, and between $12.00 and $11.00 for the third pizza. Suppose the managers do not price discriminate. The price they will charge is $D per pizza, and the quantity of pizzas they will sell is D. The consumer surplus will equal $|:|. (Carefully enter your responses considering the units on the axes of the given gure.) Suppose the managers practice price discrimination by charging one price for a customer's rst pizza, a second price for a customer's second pizza, and a third price for a customer's third pizza. Their prot-maximizing prices will be $E| for the rst pizza, $|:| for the second pizza, and $|:| for the third pizza. The consumer surplus is $El. The amount by which the economic prot changes from the previous case is $|:|. Price and cost (dollars per pizza) 0 51015 20 25 30 35 40 45 50 Quantity (thousands of pizzas per year)
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