Demand curve for stadium seats

Reference no: EM1316450

The owner of the Los Angeles Dodgers has commissioned a study that showed the demand by fans for stadium seats (per playing date) to be P = 22 - 0.2Q, where P is the average price of a ticket and Q represents the number of seats (expressed in thousands). Dodger Stadium seats a maximum of 56.000 per game. The price has been set by the owner at $10 per ticket. (Note: We are assuming for simplicity that all seats are the same in this problem. The same analysis would apply for each type of seat otherwise.)

a. How much revenue does the owner make at the current price?

b. Assuming that the owner of the Los Angeles club is first and foremost interested in maximizing revenue, has the owner overpriced or underpriced tickets to Dodger games? (Note, marginal revenue in this case is given by MR = 22 - 0.4Q)

c. The owner comes to you and says he will give you 10% of any increase in revenues that you can generate for him this coming season. Given that you can only charge a per ticket price, how much money can you expect to make per game during the coming season?

d. is there an optimal number of empty seats (per playing date) from the owner's point of view? If so, what is it?

Reference no: EM1316450

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