Scenario 15-9
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.
-Refer to Scenario 15-9. How much additional profit will the museum earn if it engages in price discrimination compared to charging each customer $8 for admission?
A)$0
B)$200
C)$400
D)$800

Question

Quizplus · Accepted Answer

The museum will earn an additional $400 in profit if it engages in price discrimination. This is because the museum will be able to charge the 100 adults $12 each, which will generate $1,200 in revenue. The museum will also be able to charge the 200 students $8 each, which will generate $1,600 in revenue. The total revenue from price discrimination will be $2,800. The cost of operating the museum on a weekday is $2,000. Therefore, the profit from price discrimination will be $800.

Scenario 15-9 Suppose Executives at an Art Museum Know That 100 Adults