7. A sports organization that engages in inelastic ticket pricing a. faces a U-s
ID: 1131925 • Letter: 7
Question
7. A sports organization that engages in inelastic ticket pricing
a. faces a U-shaped total revenue function
b. prices its tickets where marginal revenue is equal to zero
c. prices its tickets within the decreasing range of total revenue
d. earns the maximum possible ticket revenue
8. Which of the following accurately describes the law of supply in a sports setting?
a. offering higher prices to a sports organization motivates the organization to make more game tickets available
b. a sports organization hires more labor and therefore produces more sports output
c. when a sports organization raises ticket prices, it experiences a decrease in fan attendance
d. fans of a particular team experience an increase in income and therefore decide to attend more games per season
9. A reduction in ticket price will
a. increase ticket revenue if the demand for tickets is inelastic
b. increase ticket revenue if the demand for tickets is elastic
c. decrease ticket revenue if the demand for tickets is unit elastic
d. have no systematic effect on ticket revenue
10. In the expression RG = Rh + (1-)Ra,
a. RG = Ra if no revenue is shared
b. Rh represents the franchise’s broadcast revenue and Ra represents its licensing revenue
c. represents the percentage of gate revenue retained by the home team
d. RG = 0 if both Rh > 0 and Ra > 0
Explanation / Answer
8) c) when a sports organization raises ticket prices, it experiences a decrease in fan attendance.
9) b) increase ticket revenue if the demand for tickets is elastic. This also increases the total revenue of the firm. Here the demand is price elastic and a decrease in ticket price causes an increase in ticket revenue and total firm revenue.
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