The Economics of Sports
6th Edition
ISBN: 9781138052161
Author: Michael A. Leeds, Peter von Allmen, Victor A. Matheson
Publisher: Routledge
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Chapter 4, Problem 9P
(a)
To determine
The
(b)
To determine
The prices for eight games.
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Suppose the typical LA Rams fan has the following demand curve for Bills football games: P = 200 – 5G where G is the number of games the fans attend. Suppose the Bills have the chance to offer a various multi-game season ticket packages and tickets to individual games.
If the Rams want to sell a particular fan single tickets to all eight home games, what price must they charge? $___
What should be the total price for a LA Rams 8-game season ticket package? $___
What should be the average ticket price for an LA Rams 4-game season ticket package? $___
Suppose the Rams have the opportunity to sell tickets to individual games. What price should they charge? $___
Nile.com, the online bookseller, wants to increase its total revenue. One strategy is to offer a 10% discount on every book it sells. Nile.com knows that its customers can be divided into two distinct groups according to their likely responses to the discount. The accompanying table shows how the two groups respond to the discount.
Group A Group B
(sales per week) (sales per week)
Volume of sales before
the 10% discount 1.55 million 1.50 million
Volume of sales after
the 10% discount 1.65 million 1.70 million
Using the midpoint method, calculate the price elasticities of demand for group A and group B.
Why does consumer surplus decline when monopolies are present?
Chapter 4 Solutions
The Economics of Sports
Knowledge Booster
Similar questions
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- Where will you see more price discrimination: In monopoly-type markets with just a few firms or in competitive markets with many firms? Why?arrow_forwardExplain why consumer surplus declines when monopolies are present.arrow_forwardThe sale of compact disks of "lesser" performers is very sensitive to price. To sell ? CD's, a CD manufacturer must charge ? = 12 − q/8000 dollars per CD. a. Find an expression for the total revenue from the sale of ? CD'. b. Find the value of ? that leads to maximum revenue and the maximum revenue. c. Find an expression for ?, the elasticity of demand, and compute the elasticity for the value of ? you found in part b.arrow_forward
- What is the Difference between predatory pricing, tie-in sales, and bundling? At what Price should All Firms Produce at? What should a Firm do for Pricing if it faces Elastic or Inelastic Demand?arrow_forwardShell has over 13,000 gas stations in the United States. In addition to gasoline, the gas stations also sell convenience items, such as snacks, non-alcoholic beverages, wine, beer, and hot food. Suppose you work for a gas station and your boss asks you to develop a pricing strategy for bottled local wine. The demand function is ? = 100 – 4?, where ? is the monthly quantity demanded of the bottled wine and ? is the price of the bottled wine. The marginal cost per bottle of wine is $5. Complete the following tasks: 1) (Calculating) In the worksheet “Q2 Calculations” of the provided Excel file, enter formulas in columns B-D to calculate Q (quantity demanded), MC (marginal cost), and MR (marginal revenue). Please round your results to one decimal place. Note that the inverse demand function is ? = 25 − 0.25? and that the MR function can be derived from the inverse demand function using the formula introduced in Module 5. You may find it helpful to review the Excel file for Chapter 11.arrow_forwardAmazon.com, the online bookseller, wants to increase its total revenue. One strategy is to offer a 10% discount on every book it sells. Amazon.com knows that its customers can be divided into two distinct groups according to their likely responses to the discount. The accompanying table shows how the two groups respond to the discount. Group A (sales per week) Group B (sales per week) Vol. of sales before 10% discount 1.55M 1.50M Vol. of sales after 10% discount 1.65M 1.70M Using the midpoint method, calculate the price elasticities of demand for group A and group B. Explain how the discount will affect total revenue from each group. Suppose Amazon.com knows which group each customer belongs to when he logs on and can choose whether or not to offer the 10% discount. If Amazon.com wants to increase its total revenue, should discounts be offered to group A or to group B, to neither group, or to both groups?arrow_forward
- The graph below shows the daily demand curve for fresh spring water in a remote mountain village in the land of Far Country. The only spring is controlled by the village chief who earns revenue from the sale of water in order to cover the costs of running the village. The villagers bring their own jugs and pay a price per jug as they leave. a. What quantity of jugs would be sold each day in order to maximize his total revenue? Quantity: b. What price would the chief charge? Price: $ c. What is MR at this price and quantity? MR: d. Assuming no marginal costs, what price would the chief charge in order to maximize his total profits? Price: $arrow_forwardSuppose in a small town called Utopia live 200 children and 300 adults. The only entertainment in the town is a theatre. The theatre has a fixed cost of 2000 dollars for preparing each play. However, once the play is ready, then selling an additional ticket has no cost at all. Demand for adult citizens and children are given in the following table What price would this theatre company charge for an adult ticket and for a child’s ticket? How much will it make?arrow_forwardSuppose an investigation reveals that the prices charged for drinks at a tourist resort are significantly higher than the prices charged for the same drinks at hotels in the nearby village. What might the explanation for this situation be?arrow_forward
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