Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 2.1P
To determine
Discount ticket outlets and marginal cost.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
In addition to gambling, Las Vegas is famous for its live production shows. Close to 100 shows are performed at various venues across the city on any given day, and many of the shows are multi-million dollar productions with months-long waiting lists for the best seats. Box-of-fice ticket prices range from less than $10 for a few of the smaller shows to over $200 for some of the major productions. In recent years, a number of these shows have begun offering tickets for sale at half price through discount ticket outlets. These half-price tickets are only available on the day of the show, on a first-come, first-served basis. Using the concept of marginal cost, explain why many of these productions have begun to offer these half-price tickets. Who do you suppose are the most and least likely customers to purchase show tickets through these discount ticket outlets? Can you think of any reasons why a production show would choose to not offer tickets in this manner?
The Tampa Tribune and the St. Petersburg Times compete for readers in the Tampa Bay market for newspapers. Recently, both newspapers considered changing the prices they charge for their Sunday editions. Suppose they considered the following payoff table for making a simultaneous decision to charge either a low price of $0.50 or a high price of $1.00. Tampa’s profits are shown in regular type. St. Petersburg’s profits are shown in bold.
7. Which cell(s) is/are strategically stable?
You have three tickets to a Celtics game on a night that you are going to be out of town (so the value of unsold tickets is zero to you). There are only four possible buyers of a Celtics ticket. The table below lists the respective reservation prices of these four possible buyers:
Customer Reservation Price
1 $25
2 $35
3 $50
4 $60
You consider inviting bids using an English auction to sell your tickets. How much total revenue can you generate using the English auction mechanism from the sale of the three tickets? [Bids can be made in increments of $1.00]
Chapter 8 Solutions
Principles of Economics (12th Edition)
Knowledge Booster
Similar questions
- Aspen is in house arrest and is not allowed to buy stuff online. She wants a new iPhone and is willing to pay up to $5000 dollars for it. You and I both pay $1000 to buy an iPhone (Assume she only has the option to buy from one of us). Which one of the following statement is true about how much Aspen will pay for the iPhone? Competition between us will lead Aspen to pay 1200 dollars for the iPhone Competition between us will lead Aspen to pay $5000 dollars for the iPhone Aspen will pay exactly $1350 for the iPhone because her demand is inelastic Aspen will pay $5000 dollars for the iPhone, only if we can colludearrow_forwardpart ii-viiiarrow_forward4. In an oligopoly, the ideal pricing strategy is for all firms to charge the high price. Due to the structure of oligopoly markets, charging the low price is considered cheating, when there is more than one pricing-period expected, because competitors are likely to be shut out of the market in the short run. Assume that Dr. Fine and Dr. Feelgood are the only two medical doctors offering immediate walk-in medical services in a small rural town. Therefore, they operate in a two-firm oligopoly. Each doctor can charge either a high price or a low price for a standard medical visit. Figure 4 shows the possible profits for Dr. Fine and Dr. Feelgood, based on each doctor's pricing strategy. Figure 4 D r F i e Low price High pnce Dr Feelgood Low price $35 profit $35 profit $45 profit $0 profit High price $0 profit $45 profit $38 profit $38 profit Iarrow_forward
- In the novel and film The Princess Bride, the villain Vizzini kidnaps the princess. In an attempt to rescue her, the hero, Westley, challenges Vizzini to a battle of wits. Consider this variation on the actual plot. (I do not want to reveal the story.) In the battle, Westley puts two identical glasses of wine behind his back, out of Vizzini's view, and adds iocane powder to one glass. locane is "odorless, tasteless, dissolves instantly in liquid, and is among the more deadly poisons known to man." Westley decides which glass to put on the table closest to Vizzini and which to put closest to him- self. Then, with Westley's back turned so that he cannot observe Vizzini's move, Vizzini decides whether to switch the two glasses. Assume the two simultaneously drink all the wine in their respective glasses. Assume also that each player's payoff from drinking the poisoned wine is -3 and the payoff from drinking the safe wine is +1. Write the payoff matrix for this simultaneous-moves game.…arrow_forwardYou have three tickets to a Celtics game on a night that you are going to be out of town (so the value of unsold tickets is zero to you). There are only four possible buyers of a Celtics ticket. The table below lists the respective reservation prices of these four possible buyers: Customer Reservation Price 1 $25 2 $35 3 $50 4 $60 a) How much revenue can you generate using the English auction mechanism from the sale of the first ticket? [Bids can be made in increments of $1.00] b) How much revenue can you generate using the English auction mechanism from the sale of the second ticket? [Bids can be made in increments of $1.00] c) How much revenue can you generate using the English auction mechanism from the sale of the third ticket? [Bids can be made in increments of $1.00] d) How much total revenue can you generate using the English…arrow_forwardSean is a community college student and has been saving his tips from his job waiting tables at a restaurant for months to see Hamilton. He is willing to pay $705 for a ticket. Anca has seen Hamilton five times already, but wants to see it again before heading to Europe for a month. She is willing to pay $1,250 for a ticket. There is one ticket left, and the seller is charging $700. Does Sean or Anca buying the ticket lead to a more economically efficient outcome?arrow_forward
- Suppose you have one type of customer who comes to see your team play and that customer has a demand curve of P = $40 - Q. Also assume the marginal cost of having a person come to see your game is a constant $2. If you were to charge a two-part pricing scheme whereby you charged a PSL and then a price-per-ticket, which strategy would lead to the highest possible profit per customer? PSL = $722; P = $2 %3D PSL = $361; P = $21 %3D PSL = $1,444; P = $21 %3D PSL = $361; P = $2 %3Darrow_forwardIf the price match policy is a good idea, how widely should it be advertised? Explain. You woke up this morning to a troubling advertisement on TV: A+ Rental Cars' local competitor is discounting their economy rentals. After doing a little digging, you discover that your competitor has launched an aggressive advertising campaign, reducing the price on their economy line from $32.99 to $24.99. Based on your knowledge of previous pricing practices, you expect a similar price reduction across all vehicle types.arrow_forwardCompany A and Company B are competing oligopolists. Both companies are considering increasing or maintaining their prices. The payoff matrix shows the profits of the companies in millions based on their possible actions.. Company A Increase Price Company B Increase Price Maintain Price $50, $40 Maintain Price $55, $45 $35, $30 $60, $35 The government offers a $5 million subsidy to maintain current pricing. What is the expected outcome of the new payoff matrix, given the subsidy? The Nash equilibrium changes, and both companies will maintain their prices The Nash equilibrium changes, and both companies will increase their prices. The Nash equilibrium remains the same, and both companies will increase their prices Company A will increase its price, while Company B maintains its price. Company A will maintain its price, while Company B increases its pricearrow_forward
- Two firms are playing an infinitely-repeated prisoner's dilemma pricing game of the following form: Firm 1 Firm 2 Low price High Price Low price 4, 4 20, 0 High price 0, 20 12,12 Consider the decision to cheat ONLY ONCE for a firm in this game against the opponent that is a Tit-for-Tat player. Cheating firm gets an extra in payoffs for the first round, but has to face $0 payoffs for the second round in order to be able to bring the opponent to the collusive outcome again in the third round. What is the minimum rate of return (r) that would make defecting only once? Show your calculations.arrow_forwardIn late 1991 two firms, Delta Airlines and the Trump Shuttle, provided air shuttle service between New York and Boston or Washington. The one-way price charged by both firms was $142 on shuttle mileage given to members of the Delta frequent-flier program from 1,000 to 2,000 miles, even though actual mileage from New York to either Boston or Washington is about 200 miles. Moreover, Delta also offered an extra 1,000 miles to frequent fliers who made a round-trip day's total to 5,000 miles. Almost simultaneously, Trump changed the frequent-flier mileage it gave shuttle passengers. (It participated in the One Pass frequent-flier program with Continental Airlines and some weekdays and $92 on weekends, with lower off-peak advance purchase fares. In September 1991 Delta increased the per-trip on the same day, raising a possible foreign carriers.) What sorts of changes do you think Trump made? Why?arrow_forwardI am struggling with this question for a Game Theory course. It would be great to have a visual breakdown of how to solve it so that I understand what to do for the rest of the problems.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education