You are in charge of setting the optimal price for tickets for a local hockey te

Question

You are in charge of setting the optimal price for tickets for a local hockey team. The demand schedule for hockey tickets is below:

Price

Quantity

$10

   6,000

   11

   5,900

   12

   5,750

   13

   5,500

   14

   5,200

   15

4,900

   16

4,500

   17

4,000

   18

3,500

1.       What price maximizes the revenue from tickets? (Note, since marginal costs are assumed to be zero, this also maximizes profits)

2.       Each spectator also spends money parking and on concessions. The team owns both the nearby lots and the concession stands at the arena. The team has estimated that concession profits increase by $5 per person, and for every four spectators, one parking permit that is priced at $10 is purchased. With these new sources of revenue, what is the optimal ticket price?

*** Please answer both questions and show calculations.

Price

Quantity

$10

   6,000

   11

   5,900

   12

   5,750

   13

   5,500

   14

   5,200

   15

4,900

   16

4,500

   17

4,000

   18

3,500

Explanation / Answer

Just multply each price by the number of tickets sold at that price. The maximum revenue occurs when p=15.

The revenue is 15*4900=73500 at this price.

2. Here we multiply the (price + 5+2.5) by the quantity as this is the new revenue. The new max occurs when p=13 and the revenue is (13+7.5)*5500=112750

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

---

---

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