What are the owner profits if a low quality team is chosen

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Reference no: EM132201190

Question: A team owner learns from a research firm that the demand for winning looks like : P=(36-2A)W (P is ticket price, A is attendance, W is the quality of the team measure by winning percent). To focus on the long run, the team owner sets marginal cost equal to zero, but the owner knows that fixed costs determine quality in the following way: TFC=165W2 (W is winning percent). With this information, answer the following:

a) What are the owner's profits if a low quality team is chosen (use W=0.350)

b) What are the owner's profits if a high quality team is chosen (use W=0.650)

c) Comparing your answers, aforementioned, should the owner choose the high quality or low quality alternative.

d) Graph the relationship between quality (0<W<1) and profits. What is the precise winning percent that earns the owner the greatest possible profits.

Reference no: EM132201190

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