1. A monopolistic pro sports franchise called the Reno Wranglers faces ticket de

Question

1. A monopolistic pro sports franchise called the Reno Wranglers faces ticket demand that varies according to the equation Q 16200-100P and earns marginal revenue according to the function MR = 162-0.02Q, where Q is the number of tickets (arena seats) sold per unit of time and P is the price per ticket in dollars. The Wranglers incur marginal costs according to the function MC = 66 + 0.01Q. If the Reno Wranglers are profit maximizers, how many tickets will the franchise sell per unit of time? What price per ticket will the Wranglers charge? a. The Reno Wranglers incur total costs according to the function TC = 206,600 + 66Q+0.005Q2. If the Wranglers operate at the profit-maximization point, how much economic profit (or loss) will the franchise earn per unit of time? b, c. Calculate the vertical intercept of the demand function and the marginal revenue d. In light of the results from parts a and c, calculate the level of consumer surplus e. If Reno government officials awarded the Wranglers a subsidy of $40,000 per function, and demonstrate that they are equal. associated with the Wranglers. [Hint: Think about the area of a key triangle.] unit of time, would the Wranglers earn positive economic profit, break even, or earn economic losses? Explain. After this subsidy, would fans still want the Wranglers to stay in town, or would they want them to move? Explain.

Explanation / Answer

a) for profit amximizing price and output , MR =MC

162 - 0.02Q = 66 +0.01Q

96 = 0.03Q

or Q = 3200

P = 162 - 0.01*3200

P = 162 - 32 = $130.

so, profit maximizing price is $130 and tickets is 3200.

B) TC = 206600 +66Q +0.005Q2

TC = 206600 + 211200 + 51200 = $469000

TR = 3200 * 130 = $416000

PRofit = TR-TC = 416000 - 469000 = $-53000

so Reno Wranglers having loss of $53000.

C) we have demand fucntion Q = 16200 - 100P

or inverse demand function, P = 162 - 0.01Q

vertical demand intercept is when Q = 0, therefroe, P = 162.

and MR intercept = 162

yes both are equal to 162.

D) consumer surplus = 1/2 *P *Q

CS = 1/2 * ( 162 - 130 ) * 3200

CS = 1/2 * 32 * 3200

CS =$ 51200

E) please upload question again. its again chegg policy

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