The Bethany College Athletic Department sells both football and basketball ticke
ID: 1157424 • Letter: T
Question
The Bethany College Athletic Department sells both football and basketball tickets to
student fans. Sports fans among the Friends University student body can be classified
into three “types,” with the following reservation prices for tickets:
Reservation Prices ($)
Buyer Type
Number of Students
Football Tickets
Basketball Tickets
Football Fans
10,000
100
40
“All Sports” Fans
2,000
75
75
Basketball Fans
3,000
50
105
If the tickets for football and basketball games are sold separately, find the Athletic Department’s profit maximizing price to charge.
a. Pmax for Football tickets (Price)
b. Pmax for Basketball tickets (Price)
c. What is the maximum profit that can be achieved pricing separately?
If football and basketball tickets are sold as a bundle, find the Athletic Department’s profit maximizing price and the resulting profit.
d. Pmax(Bundle) (Price of the bundle)
e. What is the maximum profit that can be achieved pricing as a bundle?
f. Which of the two strategies should the athletic department choose? (Bundling or Separate)
Reservation Prices ($)
Buyer Type
Number of Students
Football Tickets
Basketball Tickets
Football Fans
10,000
100
40
“All Sports” Fans
2,000
75
75
Basketball Fans
3,000
50
105
Explanation / Answer
a) Reservation price is the maximum price that the buyer can pay for the product so
Price(max) for the football tickets would be the price paid by football fans = 100
b) Price(max) for the basketball tickets would be by the basketball fans = 105
c) Maximum profit for the football fans for football tickets = 10,000*100 = 10,00,000
for the football fans for basketball tickets = 10,000*40 = 4,00,000
profit for basketball fans for football tickets = 2000*75 = 1,50,000
profit for basketball fans for football tickets = 2000*75 = 1,50,000
d) if the total budget is football fans*football tickets + basketball fans*basketball tickets = 10,000/100+3000*50 = 11,50000
so max price for football = 11,50,000/10,000 = 115
max price for basketball = 11,50,000/3000 = 1150/3
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