You’re the manager for a college football team. Assume you own the stadium and t

Question

You’re the manager for a college football team. Assume you own the stadium and the variable cost per attendant is $0. You’ve been told by your in-house economist that you should set the price of tickets at $50 to maximize profit (at current, you set one price). Your football coach is really pushing to sell out the game. Under what condition will profit maximization also result in a sold out game? Under what condition will profit maximization not result in a sold out game? (Solving mathematically and drawing a figure would be helpful).

Explanation / Answer

Here Marginal cost = 0

While revenue is 50

Therefore, under condition of prices > MC or MR=MC, it will not result in a sold out game

but if P< MC then it will lead to sold out.

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