Questions 1 through 3 refer to the scenario that follows

.784px;”=””>1) Questions 1 through 3 refer to the scenario that follows. An amusement park, whose customer set is made up of two markets, adult and children, has developed demand schedules as follows:Price ($)Quantity, AdultsQuantity, Children51520614187131681214911121010101198128613741462The marginal operating cost of each unit of quantity is $5. (Hint: Because marginal cost is a constant, so is average variable cost. Ignore fixed cost.) The owners of the amusement park want to maximize profits.Calculate the price, quantity, and profit for each segment if the amusement park charges a different price in each market. (Hint: calculate profit at each price in the adult market, then in the child market, and choose profit maximizing in each. Using a spreadsheet would make this task manageable.)Adult market price (in dollars): [a]Adult market quantity: [b]Adult market profit (in dollars): [c]Child market price (in dollars): [d]Child market quantity: [e]Child market profit (in dollars): [f]Total profit (adult + child, in dollars): [g]2) Calculate the price, quantity, and profit if the amusement park charges the same price in the two markets combined. (Hint: Add adult and child quantities together, and treat this total and the entire market quantity at each price.)Market price (in dollars): [a]Quantity (child + adult at this price): [b]Profit: [c]3) Is profit higher, lower, or the same when the market is split with different prices for adults and for children?Higher profit with split pricingLower profit with split pricingSame profit with split pricingCannot determine with the information available4) Questions 4 through 8 refer to the information that follows. Consider a small town that is served by two grocery stores, White and Gray. Each store must decide whether it will remain open on Sunday or whether it will close on that day. Monthly payoffs for each strategy pair are as shown in the table below..jpg”>Which firm is the most profitable in this market?Gray (Profit is highest in every situation.)WhiteNeither – they are equally profitableNeither – there is no profit made by either firm5) What is White’s dominant strategy?Open SundaysClosed SundaysThere is no dominant strategy6) What is Gray’s dominant strategy?Open SundaysClosed SundaysThere is no dominant strategy7) What will be the likely equilibrium outcome, assuming no additional information is available to either firm?Both open SundaysBoth closed Sundays**White open Sundays, Gray closed SundaysWhite closed Sundays, Gray closed Sundays8) Is the position identified in question 7 the best possible outcome for both firms?Yes, the position identified in the previous question is the best outcome for both.No, it would be mutually advantageous to cooperate and choose a different outcome.Gray could do better, but White is already in the best position and would therefore need an incentive to cooperate.White could do better, but Gray is already in the best position and would therefore need an incentive to cooperate.

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