P = 50 - 1/500Q is the demand curve for tickets. MC = $10 per ticket. What is the optimal price? Calculate the consumer surplus at this price.
What will be an ideal response?
For the given demand curve, MR = 50 - 1/250Q. Setting MC = MR, we get
1/250Q = 40 or Q = 1,000 units, and so P = $48. So consumer surplus is = (1/2) x (50 - 48) x 1,000 = $1,000.
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