The Grand Theater is a movie house in a medium-sized college town. This theater

Question

The Grand Theater is a movie house in a medium-sized college town. This theater shows unusual films and treats early-arriving movie goers to live organ music and Bugs bunny cartoons. If the theater is open, the owners have to pay a fixed nightly amount of $500 to show a film. In addition, the movie house incurs an additional cost of two dollars for each person that attends a movie. For simplicity, assume that if the theater is closed, its costs are zero. The nightly demand for Grand Theater movies by students is Qs = 220

Explanation / Answer

(A)

QT = Qs+QN

= 220-40Ps +140-20PN

and given that Ps=PN=PT

so

QT=360-60PT

(b)

QT=360-60PT

No of tickets for proit to be maximum is QT (max at PT=0), is

QT = 360 tickets

(c)

These tickets will be sold at $0

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