Consider the Following Scenario to Answer the Following Questions: the Varsity,located

question 98

Multiple Choice

Consider the following scenario to answer the following 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 the amount of consumer surplus 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 cards?

• A) $0
• B) $500
• C) $1,000
• D) $2,500
• E) $5,000

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Definitions:

Loan Date

The specific date on which a loan agreement goes into effect or when the loan funds are disbursed.

Interest Rate

The percentage of a loan amount charged by the lender to the borrower for the use of money, expressed as an annual percentage.

Scheduled Payment

Regularly planned payments towards a debt or obligation, often part of a loan or mortgage repayment plan.

Equivalent Payment

A payment or series of payments adjusted to represent a common value under certain specified conditions, often used in comparing different financial plans.