A local movie theater in a region charges different prices for different consumer groups, child rate (age of 3-13), general adult (age if 14-64) and senior rate (age of 65 or older)

Marketing Jan 09, 2021

A local movie theater in a region charges different prices for different consumer groups, child rate (age of 3-13), general adult (age if 14-64) and senior rate (age of 65 or older). Why is the local theater able to charge different prices even if they sell identical product to the different consumer groups? Explain it with the concept of market structures.

Expert Solution

Using the market structure, the movie theater might be a monopoly as there is a presence of price discrimination: the theater charges different prices for each consumer group. In a monopoly, it is easy to do that as, presumably, this is only the movie theater in town. However, if the movie theater operates under perfect competition, it should charge a fixed fee regardless of the consumer groups, otherwise, it will lose profit.

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