1. (15 points) You did so well selling concert tickets that you've been put in charge...

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1. (15 points) You did so well selling concert tickets that you've been put in charge of organising the next concert. Specifically, you need to book a musical act and decide on the ticket price. If you book a musical act with s million song streams (a measure of their popularity) and charge $p for each ticket, you will sell t q(p,s) tickets, you will need to pay your musical act $f(s) for their appearance fee, and you will need to pay $u(t) for a venue large enough. Your goal is to maximise concert profits. a) (2 points) What do you expect the signs of q, q, f', and v' to be? For each, explain why. b) (3 points) Formally write the profit maximisation problem. c) (2 points) Write the maximisation problem's first order conditions. For the rest of the problem, suppose 9(p,s) = - S 2 f(s) 3s = 1 v(t) = /t 3 describe the ticket sales, cost of the musical act, and cost of the venue. d) (3 points) What price should you charge per ticket? e) (3 points) How popular of a musician should you book? f) (2 points) Choose one of the first order conditions and interpret it in terms of the concepts of marginal revenue and marginal cost. 1. (15 points) You did so well selling concert tickets that you've been put in charge of organising the next concert. Specifically, you need to book a musical act and decide on the ticket price. If you book a musical act with s million song streams (a measure of their popularity) and charge $p for each ticket, you will sell t q(p,s) tickets, you will need to pay your musical act $f(s) for their appearance fee, and you will need to pay $u(t) for a venue large enough. Your goal is to maximise concert profits. a) (2 points) What do you expect the signs of q, q, f', and v' to be? For each, explain why. b) (3 points) Formally write the profit maximisation problem. c) (2 points) Write the maximisation problem's first order conditions. For the rest of the problem, suppose 9(p,s) = - S 2 f(s) 3s = 1 v(t) = /t 3 describe the ticket sales, cost of the musical act, and cost of the venue. d) (3 points) What price should you charge per ticket? e) (3 points) How popular of a musician should you book? f) (2 points) Choose one of the first order conditions and interpret it in terms of the concepts of marginal revenue and marginal cost.

Answer rating: 100% (QA)

a The sign of q quantity of tickets sold is expected to be positive because as the ticket price increases the demand for tickets generally decreases l... View the full answer