ulgeriminatory pricing Use the information below to answer the following questi

Question

ulgeriminatory pricing Use the information below to answer the following questi ons. The Des Moines D shown that Monday and days. The following i valuating ticket prices for its basketball games. Studies have sday ballganes average less than half the fans of games on other gons are e nfo rmati on pertains to the stadium's normal operations per season. Average fans per game (all games) Average fans per Monday/Tuesday game Number of home games per season Stadium capacity 2,500 fans 1,000 fans 30 games 3,500 seats Variable operating costs per operating hour Marketing costs per season for basketball $2,000 $138,750 925, 000 Customer service costs per season for basketball The stadium i available for some th one ticket per game. s open for 5 operating hours on each day a game is played. The stadium is e type of event 300 days a year. Ali employees work by the hour except for De3 ome n addition, only one game ia played per day and each fan would have only what is the minimum long-run price for ballgames assuming all tickets are priced the samo (rounded to the nearest cent)? a. $4.40 b· $8.60 c. 6.18 d. $171.45 30. The stadium authority wants to increase the attendance on Mondays and Tuesdays to an average of 2,000 fans. It thinks it can do this by.lowering the price of tickets. What is the minimum price that can be charged for the off-peak nights (rounded to the neares cent) ? a $1.36 b. $4.00 c. $5.00 d. $10.00

Explanation / Answer

Requirement 29 Variable operating costs 300000 =5*30*2000 per season Marketing costs per season 138750 Customer service costs per season 25000 Total cost 463750 Average fans per game 75000 =2500*30 Total No. of fans Minimum Long run price 6.18 The correct alternative is C with answer $6.18 Requirement 30 Minimum price that should be charged off peak nights is Variable costs 10000 =2000*5 per day No. of fans expected on Mondays & Tuesdays 2000 Minimum price 5 The correct alternative is C with answer $5

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