A Baltimore restaurant offers 4-course meals mid-week (Tuesday, Wednesday, and Thursday).

The restaurant is located near two universities. In order to attract more students, it is considering
a two-tier pricing structure for this offering. The restaurant hired a consultant to determine
market demand for 4-course meals. The following inverse demand relations exist:

Price(general public)=225-0.005Q(general public)

Price(students)=125-0.00125Q(students)

The restaurant faces the following total cost function:
C=1,500,000+25Q
A. Assuming that the restaurant can price discriminate between the types of customers,
calculate the profit-maximizing output, price, and profit.
B. Calculate the profit-maximizing output, price, and profit that would result if the restaurant
maintained its current one-price policy.
C. Does a price discrimination strategy enable the restaurant to attract more students?