Question

Suppose executives at an art museum know that 100 adults are willing to pay $12 for admission to the museum on a weekday. Suppose the executives also know that 200 students are willing to pay $8 for admission on a weekday. The cost of operating the museum on a weekday is $2,000. How much profit will the museum earn if it engages in price discrimination?
$1,200
$2,600
$1,600
$800

Answer 1

Answer:

$800

Explanation:

Price discrimination is a technique used by business owners and business in general that consists on chargin a certain group the maximum they are willing to pay for the product of service, in this case it would be $12 for adults and $8 for students, to know how much they will make we just multiply the cost of the tickets by the tickets bought, and the fmor that withdraw the cost of operation.

$Tickets*Tickets cost=Earnings\\( 12*100)+( 8*200)=\\(1200)+(1600)= 2800$

Now we know the museum made $2800 in tickets, we take out the $2000 of the operational cost, and we are left with $800 wich would be the net profit for the museum.