Consider the Following Scenario to Answer the Questions

question 28

Multiple Choice

Consider the following scenario to answer the questions:
The Varsity, located in downtown Atlanta, is the world's largest drive-in restaurant. Located near the Georgia Tech campus, the drive-in attracts two distinct types of customers: college students and visitors to Atlanta. The owners are considering offering a student discount of $1 off their combo meal, which is regularly priced at $9. There are 5,000 students interested in purchasing a combo meal, with a maximum willingness to pay of $8. There are 5,000 visiting customers interested in purchasing the combo meal, with a maximum willingness to pay of $9. Assume that each customer, at most, will purchase a single meal and the marginal cost is $5.
-If the Varsity decides to practice price discrimination, what will be its total revenue if it charges most customers $9 for a standard combo meal but charges a reduced price of $8 for only those customers who show their student identification card?

• A) $95,000
• B) $90,000
• C) $85,000
• D) $80,000
• E) $75,000

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Definitions:

Death Penalty

A governmental sanction where a person is put to death by the state as punishment for a crime.

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A factor, condition, or threat that discourages individuals from engaging in particular behaviors, often used in the context of crime prevention.

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Medical doctors specialized in the diagnosis, treatment, and prevention of mental illnesses and emotional disorders.