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

question 169

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.
-What will be the amount of the Varsity's total revenue before the offer of a student discount when the single price of $9 per combo meal goes into effect?

• A) $90,000
• B) $85,000
• C) $60,000
• D) $45,000
• E) $35,000

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