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The Star Theater is the only movie theater in Hollywood, SC, and therefore it has price-setting power. The Star Theater has two distinct types of
The Star Theater is the only movie theater in Hollywood, SC, and therefore it has price-setting power. The Star Theater has two distinct types of customers: (i) senior citizens and (ii) non-senior citizens. The demand curve among senior citizens is: y1=100-10p1, for p1, for p1 10, where y1 is the number of seats demanded by senior citizens at a senior citizen ticket price of p1 The demand curve among non-senior citizens is: y2 = 140-10p2, for p2 14, where y2 is the number of seats demanded by non-senior citizens at a non-senior citizen ticket price of The Star Theater's cost function is C(y1,y2) = C(y1 y2) = F (y1 y2) where F is the fixed cost of operating the theater and y1 and y2 are (as already defined) the number of senior citizen and non-senior citizen customers, respectively. What ticket price does the Star Theater set for senior citizens if it operates as a profit-maximizing third-degree price discriminator
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