Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Chapter 12, Problem 12.2IP
To determine
The efficient revenue management for Cowboys Stadium, super bowl, and other small events.
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If the demand curve for NFL tickets is P = 250 - 0.5Q
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6. The Mesa Redbirds football team plays in a stadium with a seating capacity of 80,000. However, during the past season, attendance averaged only 50,000. The average ticket price was $30. If price elasticity is 1. What price would the team have to charge in order to fill the stadium? If the price were to be decreased to $27 and the average attendance increased to 60,000, what is the price elasticity? If price elasticity is -4, what price would the team have to charge in order to fill the stadium?
If the price were to be decreased to $27 and the average attendance increased to 60,000, what is the price elasticity?
A baseball team plays in a stadium that holds 72000 spectators. With the ticket price at $8 the average
attendance has been 29000. When the price dropped to $6, the average attendance rose to 36000. Assume
that attendance is linearly related to ticket price.
What ticket price would maximize revenue? $
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Chapter 12 Solutions
Managerial Economics: A Problem Solving Approach
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- nee Question 1. You are the pricing manager for a professional football team. Your stadium can seat 70,000 spectators. The marginal cost of selling another ticket (and thereby seating another spectator) is $0. Therefore, you are primarily interested in maximizing total revenue. For each of the following scenarios give the revenue-maximizing price. a. The demand for tickets at each game is 120,000 − 5,000p. b. The demand for tickets at each game is 120,000 − 4,000p. c. The demand for tickets at each game is 200,000 − 5,000p. d. The demand for tickets at each game is 180,000 − 4,000p.arrow_forwardA baseball team plays in a stadium that holds 58000 spectators. With the ticket price at $11 the average attendance has been 26000. When the price dropped to $10, the average attendance rose to 29000. Assume that attendance is linearly related to ticket price. What ticket price would maximize revenue? $arrow_forward3.2. The stadium of the MANU has 30 seats. The demand curve for tickets has a price intercept of $36 and a quantity intercept of 72.3.2.1. Draw the supply and demand curves to scale (in Excel and copy it to your word answer-This demand curve has the form P = 36−0.5×Q.) 3.2.2. Determine the equilibrium admission price, and the amount of revenue generated from ticket sales for eachgame. 3.2.3. A local alumnus and benefactor offer to install 6 more seats at no cost to the University. Compute the price that would be charged with this new supply and compute the revenue that would accrue at this new equilibrium price. Should the MANU accept the offer to install the seats?arrow_forward
- A university football team faces the following demand schedule shown for tickets for each home game it plays. The team plays in a stadium that holds 60,000 fans. It estimates that its marginal cost of attendance, and thus for tickets sold, is zero. The table below reflects this data: Price per Ticket ($) Tickets per Game 100 80 60 40 20 0 Total revenue = $ 20,000 40,000 60,000 80,000 100,000 Using this information, calculate how much total revenue the team will earn.arrow_forwardA baseball team plays in a stadium that holds 50000 spectators. With the ticket price at $10 the average attendence has been 22000. When the price dropped to $8, the average attendence rose to 25000. Assume that attendence is linearly related to ticket price. What ticket price would maximize revenue? $arrow_forwardMultiple answers may be correct:arrow_forward
- b) When the price is $166.10, the demand is (elastic/inelastic) which means that as price the revenue will (increases/decreases) (increase/decrease)arrow_forwardFor each of the following cases, identify whether Total Revenue rises, falls, or remains constant. Explain using the 'arrow method' shown in class/ slides. (a) Demand is inelastic and price falls. (b) Demand is elastic and price rises. (c) Demand is unit elastic and price rises. (d) Demand is inelastic and price rises. (e) Demand is elastic and price falls.arrow_forwardExplain the importance of Price Elasticity to Economics of Shipping.arrow_forward
- Calculate the market equilibrium level of price and quantity for housing unit? Calculate price elasticity of demand using point elasticity method when the construction industry is in equilibrium and interpret the result? Qd = 25000-2P Qs = 10000+1parrow_forwardA company is considering building a bridge across a river. The bridge would cost $2 million to build and nothing to maintain. The following table shows the company's anticipated demand over the lifetime of the bridge: Price Quantity (Dollars per crossing) (Thousands of crossings) 8 0 7 100 6 200 5 300 4 400 3 500 2 600 1 700 0 800 If the company were to build the bridge, its profit-maximizing price would be $ ? , and it ( would or would not)? produce the efficient level of output. If the company is interested in maximizing profit, it (should , or should not)? build the bridge because profit would be . (Note: If the company incurs a loss, be sure to enter a negative number for profit.) If the government were to build the bridge, it should charge a price of $ ? True or False: The government should build the bridge. True or Falsearrow_forwarde) Would you expect the own-price elasticity of demand to be higher for financial-aid students or for non-aid students (and does it depend on whether "own price" is gross tuition or net tuition?)? Why? What about the income elasticity?arrow_forward
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