answer d and e please A monopolistic pro sports franchise called the Reno Wrangl
ID: 1112242 • Letter: A
Question
answer d and e please
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 1. a 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? b, 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? c Calculate the vertical intercept of the demand function and the marginal revenue function, and demonstrate that they are equal. In light of the results from parts a and c, calculate the level of consumer surplus associated with the Wranglers. [Hint. Think about the area of a key triangle.] d. If Reno government officials awarded the Wranglers a subsidy of $40,000 per unit of time, would the Wranglers eam positive economic profit, break even, or earn economic losses? Explain. After this subsidy, would fans still want the Wranglers to stay in town, or would they want them to move? Explain. e.Explanation / Answer
d) Consumer surplus = 1/2 *P *Q
CS = 1/2 * ( 162 - 130 ) * 3200
CS = 1/2 * 32 * 3200
CS =$ 51200
e) if the Wranglers awarded with a subsidy of $40000 per unit of time.
we know that Wranglers is having loss of =$53000
so when a subsidy awarder to Wranglers. it will minimize its loss
so, loss minimize = 53000 -40000 = 13000
so wrangler earn economic losses of $13000.
after the loss of wrangler, the fans still want to Wrangler to move . because as a fan, they dont want to be that Wrangler earn economic loss even after the subsidy is awarded.
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