Laura Runs a Nightclub

question 9

Multiple Choice

Laura runs a nightclub.Given the popularity and cache of the club, she has a monopoly position in the market.Each potential nightclub goer has the same demand of P = 22 - q, and there are 1000 customers in total in the market.Laura has a marginal cost per drink of MC = $2 per unit and no fixed cost.If Laura can charge an entry fee as well as for each drink, which statement is true?

• A)Laura charges an entry fee of $200 and $2 per drink; she makes a profit of $200 000; there is zero DWL generated in this market.
• B)Laura charges an entry fee of $0 and $12 per drink; there is a DWL of $72 generated in this market.
• C)Laura charges an entry fee of $250 and $2 per drink; there is zero DWL generated in this market.
• D)Laura charges an entry fee of $50 and $2 per drink; she makes a profit of $0; there is zero DWL generated in this market.
• E)None of the above.

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Definitions:

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An influential American psychologist who founded the humanistic approach to psychology, emphasizing the importance of free will, self-actualization, and psychological health.

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