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Question: a nightclub manager realizes that demand for drinks is more...

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A nightclub manager realizes that demand for drinks is more elastic among students and tries to determine the optimal pricing schedule. Specifically, he estimates that the demand functions are given by q1 = 30 − 6p1 for students and q2 = 24 − 4p2 for non-students. Assume that drinks cost the nightclub $2 each.

A. If the market cannot be segmented, what is the uniform monopoly price?

(a) $3.10 (b) $3.30 (c) $3.50 (d) $3.70 (e) $4.20

B. If the nightclub can charge according to whether or not the customer is a student but is limited to linear pricing, what price (per drink) should be set for students?

(a) $3.10 (b) $3.25 (c) $3.40 (d) $3.50 (e) $3.80

C. Under the same conditions of B, what price (per drink) should be set for non-students?

(a) $3.80 (b) $4.00 (c) $4.30 (d) $4.60 (e) $5.20

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