Suppose that Pattys Pool has the demand data given in Table. Further, suppose that Patty has just two types of costs: (1) rent of $24 per day and (2) towel and other service costs equal to $5 per swimmer. Over the short run, rent is a fixed cost, but towel and other service costs are variable costs. Pattys marginal cost is therefore constant at $5.

a. Under these cost conditions, and assuming first that Patty is a single-price monopolist, what are Pattys short-run profit-maximizing output and price? What is her profit or loss per day? In the long run, if Pattys rent remains the same as in the short run, should she stay in this business?
b. Now suppose that Patty figures out a way to price discriminate by dividing her swimmers into two groups: those willing to pay the price in part a and those who would not be willing to pay that price but would swim if the price were $5. What is Pattys short-run profit-maximizing output now? What is her profit or loss per day? In the long run, if Pattys rent remains the same as in the short run, should she stay in this business?
c. Lets say that Patty figures out a way to price discriminate by charging three different prices: a high price of $10 to those willing to pay that much to swim; a medium price equal to the price you found in part a; and a lower price of $5 to those who would not pay the price in part a, but would pay $5. What is Pattys short run profit-maximizing output now? What is her profit or loss per day? In the long run, if Pattys rent remains the same as in the short run, should she stay in this business?
d. Now suppose that Patty figures out a way to perfectly price discriminate, still facing the same demand curve given in Table and Figure. What is Pattys short-run profit-maximizing output now? What is her profit or loss per day? In the long run, if Pattys rent remains the same as in the short run, should she stay in this business?

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Perfect Competition Competition Oligopoly Monopolistic Monopoly ASSUMPTIONS Number of firms Output of different firms View of pricing Barriers to entry or exit? Strategic interde- Very many Standardized Differentiated Standardized or _ Many One differentiated Price taker Price setter Price setter Price setter No No PREDICTIONS Through strategic interdependence Positive, zero, or negative Positive or zero Maybe, if differentiated product Price and output decisions MC = MR MC=MR Short-run profit Positive, zero, or negative r negative Positive, zero, Positive, zero, or negative Positive or zero Long-run profit Zero Advertising? Never Zero Almost always Perfect Competition Competition Oligopoly Monopolistic Monopoly ASSUMPTIONS Number of firms Output of different firms View of pricing Barriers to entry or exit? Strategic interde- Very many Standardized Differentiated Standardized or _ Many One differentiated Price taker Price setter Price setter Price setter No No PREDICTIONS Through strategc MCMR interdependence Positive, zero, or negative Positive or zero Maybe, if differentiated product MC-MR Price and output decisions MCMR Short-run profit Positive, zero, or negative r negative Positive, zero, Positive, zero, or negative Positive or zero Long-run profit Zero Advertising? Never Zero Almost always Hourly Wage $35 25- LD Number of Nurses (millions) 0.5 1.0