The WildTimes Bar offers female patrons a lower price for a drink than male patr
ID: 1187351 • Letter: T
Question
The WildTimes Bar offers female patrons a lower price for a drink than male patrons. The bar will maximize profit by selling a total of 200 drinks per night. At the current prices,male customers buy 150 drinks,while female customers buy 50 drinks. The marginal revenue from the last drink sold to a male customer is $1.50,while the marginal revenue from the last drink sold to a female customer is $0.50. If the bar sells 151 drinks to male customers and 49 drinks to female customers instead,then
Question options:
1) total revenue will decrease $0.50.
2) profit will decrease $0.50.
3) total revenue will increase $1.
4) total revenue will increase $1.50.
5) both a and b
Explanation / Answer
a. There should not be any price discrimination between male and female customers. Both male and female customers will be offered the same price. Such parity in price will attract male customer more than female customer, which leads to turn in to more profits. Since profit maximization can be done by selling 200 units at a time, selling those items at higher price will be more beneficial, no matter whoever procures.
b. Given, selling price to a female is $0.50. Assuming $0.51 is the price for male. Therefore, the increase or decrease of revenue is as below.
Particulars
Male: 150
Female: 50
Male: 151
Female: 49
Increase/ (Decrease)
Revenue from Male
150
Particulars
Male: 150
Female: 50
Male: 151
Female: 49
Increase/ (Decrease)
Revenue from Male
150
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