1.* The table below shows the monthly demand for movies for three individuals: Sandy, Elle and Joy.
Quantity(Movies/month)
Marginal Benefit
($/movie) Sandy Elle Joy
10.00 0 0 0
7.50 1 0 0
5.00 2 1 0
2.50 3 2 1
0.00 4 3 2
a. Use this data to draw the demand curve for each individuals and for the market.
b. Use this data to calculate the price the firm sets if it must charge the same linear price to all customers. Assume marginal cost is 5 and that
there is a zero fixed cost.
c. Now suppose the firm identify each customer, so can set a different linear price for each of them. (That is, it conducts third degree price
discrimination.) What price would the firm charge each customer?
d. Compare the profit under the pricing strategy in part b and part c.
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