show step and ans 22 A city has two major league baseball teams, A and B. The nu

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22 A city has two major league baseball teams, A and B. The number of tickets sold by either team depends on the price of the team's own tickets and the price of the other team's tickets. If team A charges Pa for its tickets and team B charges Pb for its tickets, then ticket sales, measured in hundreds of thousands per season, and 5 Pa 2Pb for team B are 10-2Pa Pb for team A The marginal cost of an extra spectator is zero for both teams Each team believes the other's price is independent of its own choice of price, and each team sets its own price so as to maximize its revenue. What price do they charge per ticket? a. Team A charges 3 and team B charges 2. b. Team A charges 3 and team B charges 4. c. Team A charges 4 and team B charges 4. d. Team A charges 5 and team B charges l

Explanation / Answer

given that ticket sale of A is measured by : 10 – 2Pa+Pb and for B : 5 +Pa– 2Pb. and given that marginal cost an extra spectator is zero for both teams. thus internalizing these two equation with marginal cost situation, we can deduce that A should charge 3 and team B charges 4 .

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