Scott loves to go to baseball games, especially home games of the Cincinnatti Re

Question

Scott loves to go to baseball games, especially home games of the Cincinnatti Reds. All else equal, he likes to sit close to the field. He also likes to get to the stadium early to watch batting practice. The closer he parks to the stadium the more batting practice he is able to watch (the garages all open simultaneously) Find Scott's optimal seat type and parking garage using the information that follows Scott's Value of View $130 Location/Seat Diamond Seats Club Home Club Seating Scout Box Scout Price $237 97 87 83 73 125 120 115 95 Benefit of Arrival Time $0 10 35 50 Missed Batting Practice Parking Arrival Parking Location Time 6:20 PM 5:50 PM 5:25 PM 5:10 PM 5:00 PM Fee $4 9 Westin parking garage Fountain Square South Garage West river parking East river parking Under stadium parking 16 23 48 60 min 50 min 25 min 10 min 0 min Scott's optimal seat type is

Explanation / Answer

Solution:

To find the optimal seat type and parking garage, we calculate net benefit (value/benefit - price) derived in both, for all provided cases and see where are they maximized.

FOR SEAT TYPE :

FOR PARKING GARAGE :

Clearly, the net benefit of Scott is maximized for Club seating type ($33) and East River parking location ($27). Thus, his optimal seat type is Club seating and optimal parking garage is East river parking.

Location/Seat Price (in $) Scott's value(in $) Net benefit Diamond seats 237 130 130-237= -107 Club home 97 125 125 - 97 = 28 Club seating 87 120 120 - 87 = 33 Scout box 83 115 115 - 83 = 32 Scout 73 95 95 - 73 = 22

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