The Norman Jaguars, a minor league baseball team, has recently hired you as its
ID: 2815059 • Letter: T
Question
The Norman Jaguars, a minor league baseball team, has recently hired you as its new marketing coordinator. The team would like to increase the profitabilty of home games by using marketing tools such as promotional giveaways. You have conducted some preliminary market research to determine which promotional items generate the best returns, and have recommended offering souvenir baseball hats during an upcoming game.
The team owners tell you that all tickets for the upcoming season will be sold at $7.00, and only general admission seating will be available. The average game draws 800 fans to the ballpark, each of whom purchases a ticket. Yoour research showd that minor league teams in your region typically doule their average attendance on baeball hat giveaway nights. As such, the owners are projecting that the team will sell 1,600 tickets for this game.
The owners have found a supplier who can produce the souvenir Jaguar baseball hats for $3.10 per unit, as long as the team orders minimum of 1,000 units. The team owners are reluctant to spend thousands of dollars on this new promotion and have asked you to show profit and revenue numbers for baseball hat promotion night.
The purpose of the exercise is to learn how the variation of cost, total revenue, and quntity can determine price. Recall that: Profit = Total Revenue - Total Costs. Total Revenue (TR) = Price (P) x Quantity Sold (Q). Please fill in the blank colums with the correct answer.
Total Revenue from Ticket Sales
(Price x No. of Ticket Sales)
Cost of Baseball Hat Promotion
(No. Ordered x Cost per Hat)
1. If the tema buys 1,600 baseball hats, what is the total cost of promtion?
$9,440
$2,105
$3,200
$4,960
$275
2. If attendance increases to 1,600 for giveaway game, what is the total revenue for ticket sales?
$8,750
$11,200
$9,500
$2,000
$14,400
3. What is the revenue for the Jaguars when they have an average attendance for 800 people buying tickets?
$5,600
$3,100
$10,000
$6,400
$11,200
4. What would be the profit increase associated with baseball hat giveaway night, compared to the adverage revenue for a Jaguars game?
$3,300
$640
$0
$1,050
$199
5. What would be the profit increase associated withe the baseball hat giveaway night, compared to the average revenue for Jaguars game, if Linda was able to fine a supplier who couls produce the baseball hats for $2.55 per unit?
$1,280
$0
$5,081
$1,520
$2,440
6. When the number of tickets sold (Q) increased from 800 1600, which of the following is true?
profit decreased
profit increased
cost of promotion item decreased.
toal revenue increased
7. Based on the sata above, you conclude that providing an incentive
increased the total profit
increased the total quantity of tickets sold.
increased the total revenue
all of the are correct
A B C 1 No Promotion With Promotion 2 No. of tickets at Regular Price $800 $1,600 3 Regular Price per Ticket $7.00 $7.00 4Total Revenue from Ticket Sales
(Price x No. of Ticket Sales)
$5,600 $11,200 5 No. of Basball Hats Ordered XXXXXXXXXXXXX 6 Cost Per Baseball Hat XXXXXXXXXXXXX 7Cost of Baseball Hat Promotion
(No. Ordered x Cost per Hat)
XXXXXXXXXXXXX $0.00 8 Revenue- Baseball Hats Costs $5,600 $11,200 9 Increased Profit Earned for Promtion XXXXXXXXXXXXX $5,600Explanation / Answer
1) Cost per hat if minimum order is 1000 units = $3.10
therefore, cost per hat is $3.10 if the team orders 1600 hats
Total cost of promotion is total cost of hats
Total cost of hats = price per hat*quantity of hats ordered
Total cost of hats = 3.1*1600 = $4,960
2) Revenue = no. of tickets sold * price per ticket
Price per ticket = $7.0
If tickets sold increases to 1600 the revenue = 1600*7 = $11,200
3) If attendence is 800 then revenue = 800*7 = $5,600
4) Profit = revenue - cost
On average jaguar night, cost is zero as there is no purchase of hats
Therefore, Profit = revenue - 0 = revenue
Attendence on average jaguar night is 800, therefore profit = revenue = 800*7 = $5,600
On baseball hat giveaway night, cost = price per hat * number of hats bought = 3.1*1600 = $4,960
Revenue = 1600*7 = $11,200
Therefore, profit = 11,200-4,960 = $6,240
Increase in proft = 6,240-5,600 = $640
5) If cost of hat changes to $2.55 per unit then total cost = 2.55*1600 = $4,080
Profit = 11,200-4,080 = $7,120
Therefore, Increase in profit = 7,120 - 5,600 = $1,520
6) When tickets sold increases from 800 to 1600 then profit is increased and total revenue is also increased
7) By providing incentives, the team has increased its total profit, increased the quantity of ticke sold and increased its total revenue
Therefore, all of the options are correct.
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