The movie theater in College town serves two kinds of customers: students and professors. There are 900 students and 100 professors in College town. Each student's willingness to pay for a movie ticket is $5. Each professor's willingness to pay for a movie ticket is $10. Each will buy at most one ticket. The movie theater's marginal cost per ticket is constant at $3, and there is no fixed cost.
a. Suppose the movie theater cannot price-discriminate and needs to charge both students and professors the same price per ticket. If the movie theater charges $5, who will buy tickets and what will the movie theater's profit be? How large is consumer surplus?
b. If the movie theater charges $10, who will buy movie tickets and what will the movie theater's profit be? How large is consumer surplus?
c. Now suppose that, if it chooses to, the movie theater can price-discriminate between students and professors by requiring students to show their student ID.
If the movie theater charges students $5 and professors $10, how much profit will the movie theater makes? How large is consumer surplus?