Marginal
Quantity
Total Revenue
Revenue from
of Child
from Sale of
Sale of Child
Price
Tickets
Child Tickets
Tickets
10
0
0
-
9
0
0
0
8
0
0
0
7
0
0
0
6
0
0
0
5
100
500
500
4
200
800
300
3
200
600
-200
2
200
400
-200
1
200
200
-200
0
200
0
-200
a.
To maximize profit, you should charge adults $7 and sell 300 tickets. You should charge children $4
and sell 200 tickets. Total revenue will be $2,100 + $800 = $2,900. Because total cost is $2,000, profit
will be $900.
b. If price discrimination were not allowed, you would want to set a price of $7 for the tickets. You
would sell 300 tickets and profit would be $100.
c.
The children who were willing to pay $4 but will not see the show now that the price is
$7 will be worse off. The producer is worse off because profit is lower. There is no one that is better
off.