Question

If the venue owner is limited to charging one cover charge and menu price, what cover charge will he set? (hint: non-linear pricing without price discriminati

Answer 1

The cover charge includes the entry fees along with certain number of drinks or food items complimentary.

The venue owner must charge average cost per person as the cover charge so as to not only attract customers but also not incur losses.

Any price lower than this would lead to losses for the owner and any price higher would not attract customers.