Compute the value of the Lagrange multiplier

Assignment Help Microeconomics
Reference no: EM13687303

You are organizing a rock concert to benefit Amnesty International. The concert is to be held in a football stadium that has a seating capacity of 56,000. There are two kinds of seating: reserved and general. Demand for these seats is estimated as:

PR = 100-.00125 QR and PG = 60-.00125 QG 

Where PR and PG denote ticket prices for reserved and general seating and QR and QG are the number of those seats

All artists and support staff are donating their time however there is a fixed cost of $100,000.

a) Using the method of the Lagrange multiplier compute the prices that you will charge to so that the profit is maximized and at the same time the stadium will be filled to capacity.

Compute the number of each type of tickets sold, as well as the consequent profit level.

b) Compute the value of the Lagrange multiplier. Describe its economic significance in this case.

Reference no: EM13687303

Questions Cloud

What is monthly loan payment : A man buys a car for $18,000 with no money down. He pays for the car in 30 equal monthly payments with interest at 12 percent per annum, compounded monthly, what is monthly loan payment?
The price elasticity of supply of apples : The price elasticity of supply of apples is 2.5. A drop in the price for oranges reduced the demand for apples by 10 percent. We should expect the price of apples to drop by how much?
Compute the optimal price that you should charge : As a manager of a firm you find the marginal cost of the firm to be $10 and the fixed cost $100. For the range of prices that you are planning to charge, own price elasticity of demand is believed to be –1.25. Compute the optimal (profit maximizing) ..
Decide the demand function for hotel rooms for this hotel : As the manager of a 60-unit hotel you know that all units are occupied when you charge $80 a day per unit. Each occupied room costs $8 for service and maintenance a day. In addition there is a fixed cost of $400 a day. You have also observed that for..
Compute the value of the Lagrange multiplier : You are organizing a rock concert to benefit Amnesty International. The concert is to be held in a football stadium that has a seating capacity of 56,000. There are two kinds of seating: reserved and general.
Assembly workers gross substitutes or gross complements : After the price of car making robots fell by 10 %, the demand for assembly workers fell by 15 %. What is the cross wage elasticity of demand? Are robots and assembly workers gross substitutes or gross complements?
Draw the labor demand curve for baristas at the coffee shop : The labor demand curve for Baristas at coffee shops in a certain city is E=300-20W where E is the Barista hours demanded and W is the wage in dollars per hour. The equilibrium wage is $4 per hour but the government puts in place a minimum wage of $5 ..
Starting sole proprietorship or partnership type of business : "Starting a sole proprietorship or partnership type of business is better because the profits from the business will be enjoyed by only a single owner or a few partners." Do you agree or disagree with this statement? Why?
Differences among penalties for violation-enforcing agencies : What are the similarities and differences among Title VII of the Civil Rights Act and Executive Order 11246? Make a chart listing similarities and differences among the two including covered employers, penalties for violation, enforcing agencies, and..

Reviews

Write a Review

 

Microeconomics Questions & Answers

  Create scatter plot and insert regression line and equation

the data are real us gross domestic product in billions of dollars and domestic revenue passenger miles in millions

  Do you favor term limits for elected officials

Explain: “Politicians would make more rational economic decisions if they weren"t running for reelection every few years.” Do you favor term limits for elected officials?

  The gains from specialization and trade are based on

the gains from specialization and trade are based on comparative advantage which reflects the relative opportunity

  Effect and incentive of franchises to maintain quality

Why would a chain such as Marriott tend to own its hotels in resort areas, such as national parks, where there is little repeat business and franchise hotels in down-town areas, where there is a lot of repeat business? Thinks of the reputation ..

  At what production quantity would brewery be indifferent

Assume the annual cost of capital is 10% of the total investment( this represents annual fixed cost of the initial investment). At what production quantity per year would the brewery be indifferent between the two investment opportunities.

  Does recycle price offered on aluminum cans over glass

why have soft drink firms chosen to use aluminum cans over glass bottles to fill its contents? how does the recycling

  Develop the realistic scenario which illustrates

create a realistic scenario that illustrates the aggregate-demand aggregate-supply model. in your scenario you should

  The sec regulations require us corporations to publish

the sec regulations require u.s. corporations to publish operating results on a quarterly basis. how does this short

  Which of the given products and services are likely to

which of the following products and services are likely to encounter adverse selection problems golf shirts at

  Now assume government imposes special tax on the computers

supply demand amp government in the marketsa doctoral student has just completed a study for her dissertation and

  Ratio of marginal product

You were recently hired to replace the manager of the Roller Division at a major conveyor manufacturing firm, despite the manager's strong external sales record.

  Describe the baddeley-hitch model of memory

Describe the Baddeley-Hitch model of memory

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd