Question

Suppose the average student’s demand for a team's football tickets is as follows: Price $20 $14...

Suppose the average student’s demand for a team's football tickets is as follows:

Price $20 $14 $10 $7 $5

Quantity 1 2 3 4 5

a. If this team is a profit maximizer and it can only sell single game tickets, what price will they charge, how many tickets will the average student buy, and how much profit will the college make per student (assuming MC = 0)?

b. If this team is a profit maximizer but instead sells season-tickets for all 5 home games, what price will the college charge and how much profit will the college make per student?

c. Give at least 2 other reasons besides higher ticket revenue why this team would prefer to sell season tickets rather than individual game tickets.

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Answer #1
Price Quantity TR MR
20 1 20 20
14 2 28 8
10 3 30 2
7 4 28 -2
5 5 25 -3
a) The team will sell till MR > MC. Therefore firm will sell 3 tickets.
b)
Price Quantity TR MR
20 5 100 20
14 10 140 40
10 15 150 10
7 20 140 -10
5 25 125 -15
The team will now sell 15 tickets.
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