BundlingSuppose that an arena has a capacity of 20,000 seats. Over the course of a weekend, a tournament will host 3 games between 6teams with each team playing exactly one game. There are 2000 dedicated fans of each team (so 2000*6=12,000 total dedicatedfans), who will each pay up to $150 to see the game with their team playing and up to $10 per game to see the other two games.There are also 2000 general fans who will pay up to $50 per game to see each of the three games. Thus, there are 14,000 fansaltogether (2000*6 + 2000). Assume the marginal cost of admitting one more fan (up to the capacity limit) is $0.a. As the manager of the arena, suppose you could perfectly price discriminate. How many tickets would you expect to sell to eachgame? What is your total revenue for all three games?Tickets Sold (per game):Total Revenue: $For the rest of this problem, assume perfect price discrimination is not possible and provide answers to maximize revenue (Since thereare no costs, this is the same as maximizing profit.)b. If you sold individual tickets to each game at a uniform price, how would you price tickets and how many tickets would you expectto sell to each game? What is your total revenue for all three games?Price per ticket: $Tickets Sold (per game):Total Revenue: $(c) If you sold a package ticket that provided entrance to all 3 games and if you did not sell individual tickets, how would you price thepackage ticket and how many package tickets would you expect to sell? What is your total revenue?Price per ticket: $Tickets Sold:Total Revenue: $(d) Now consider the possibility of selling both a package ticket that provided entrance to all 3 games and also individual tickets toeach game. Is it possible to earn greater revenue than in part (c)?(Click to select)

Total Number of seats in arena = 20,000Number of teams = 6Fans of each team = 2000Number of general…

Suppose that an arena has a capacity of 20,000 seats. Over the course of a weekend, a tournament will host 3 games between 6 teams with each team playing exactly one game. There are 2000 dedicated fans of each team (so 2000*6-12,000 total dedicated fans), who will each pay up to $150 to see the game with their team playing and up to $10 per game to see the other two games. There are also 2000 general fans who will pay up to $50 per game to see each of the three games. Thus, there are 14,000 fans altogether (2000*6 + 2000). Assume the marginal cost of admitting one more fan (up to the capacity limit) is $0. a. As the manager of the arena, suppose you could perfectly price discriminate. How many tickets would you expect to sell to each

Suppose that an arena has a capacity of 20,000 seats. Over the course of a weekend, a tournament will host 3 games between 6 teams with each team playing exactly one game. There are 2000 dedicated fans of each team (so 20006-12,000 total dedicated fans), who will each pay up to $150 to see the game with their team playing and up to $10 per game to see the other two games. There are also 2000 general fans who will pay up to $50 per game to see each of the three games. Thus, there are 14,000 fans altogether (20006 + 2000). Assume the marginal cost of admitting one more fan (up to the capacity limit) is $0. a. As the manager of the arena, suppose you could perfectly price discriminate. How many tickets would you expect to sell to each

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Thelma and Louise are competitors in a local beer market and each is trying to decide if it is worthwhile to advertise. If both of them advertise, each will earn a profit of $2000. If neither of them advertises, each will earn a profit of $5000. If one advertises and the other doesn't, then the one who advertises will earn a profit of $7500 and the other will earn a profit of $1000. To make the most money, what should Thelma do and how much profit will she earn? Select one: a. she should advertise, and she will earn $7500 b. she should do whatever Louise does, and will earn either $2000 or $5000 C. she should not advertise, and she will earn $5000 d. she should advertise, and she will earn $2000 Next page
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