The demand function for football tickets is: QD = 200.000-10.000 P. The Universi

Question

The demand function for football tickets is: QD = 200.000-10.000 P. The University has an athletic director who would like to set ticket prices so as to maximize total revenue. PQ. The football stadium holds 100.000 spectators. What is the equilibrium P and Q when the Stadium is full to capacity? What is the price elasticity of demand when live stadium is full to capacity? Does this equilibrium price maximize total revenue? After a series of winning games the demand function for football tickets changes to: QD = 300,000-10.000P. If the stadium is full to capacity what is the ticket price? What is the price elasticity of demand at this new ticket price when the stadium is full? If the athletic director could expand the stadium capacity so as to maximize total revenue given the new demand function, what would the stadium capacity be? Draw a graph to illustrate your answers.

Explanation / Answer

a) 100,000= 200,000-10,000P 10,000P= 100,000 P=$10 b)-10,000* 10/100,000= -1 c) Revenue= PQ= 200,000P-10,000P^2 dR/dp= 200,000-20,000P Set equal to zero to find max 200,000-20,000P=0 P=10 so equilibrium price does max total revenue. d) Qd= 300,000-10,000P 100,000= 300,000-10,000P 10,000P= 200,000 P=$20 e) -10,000*20/100,000= -2 f) R=PQ= 300,000P-10,000P^2 dR/dp= 300,000-20,000P Set equal to zero for max 20,000P= 300,000 P= $15 300,000- 10,000*15= 150,000 stadium should be expanded to max revenue. I'll let you draw whatever graphs you think necessary on this.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.