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First degree price disrimination, identical consumers (12 points). Suppose the market demand for Avengers: Age of Ultron (May 1, 2015) is given by QD = 2000 – 100P, and the total cost of the providing the movie is T C(Q) = 10Q, where Q is movie theater seats. (a) (4 points) If the theaters are practicing perfect price discrimination, how many tickets should they sell? (b) (4 points) How much producer surplus do the theaters receive under perfect price discrimination? (c) (4 points) Suppose the market demand for Avengers comes from the individual demands of identical consumers. In equilibrium, each individual ends up purchasing 1 ticket. Determine the price charged to each individual under perfect price discrimination. (Note: the solution to this problem is different from the in class exercise on Beyonce tickets.)
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