Question

Suppose seven individuals enjoy going to the comedy club. Their demand is as follows.

Suppose the comedy club had a monopoly and a marginal cost of $7 per entrant. Suppose the club could perfectly price-discriminate. That is, it could charge each customer a different price equal to his or her maximum willingness to pay. How many tickets would the comedy club sell?   

Answer 1

The club will sell tickets at a price that is higher than its marginal cost. So, the minimum ticket price is $7. Since all consumers have a willingness to pay that is higher than $7, charging a price of, for example $8, will make all the consumers purchase a ticket. Therefore,

Club will sell 7 tickets.