Consider a sandwich shop at the center of a college campus. It serves two kinds
ID: 1242687 • Letter: C
Question
Consider a sandwich shop at the center of a college campus. It serves two kinds of customers--students and faculty. Because it's a far walk to other sandwich shops, and because its customers are often in a hurry, this shop faces a downward-sloping demand curve and acts like a local monopolist. Furthermore, it is able to price discriminate--that is, it sets one price for students and another for faculty. It has a constant marginal cost of $3 per sandwich, and no fixed costs. The following graphs show the demand curves and marginal revenue curves for students and faculty.
Explanation / Answer
option D