A team has 105 potential fans who may choose to attend one or more of the teams
Question:
A team has 105 potential fans who may choose to attend one or more of the team’s five home games. 100 of the fans will pay up to $25 to attend a single game, but will pay nothing to attend any additional games. 5 fans, however, have the following demand schedule:
Value of 1st game: $25
Value of 2nd game: 20
Value of 3rd game: 15
Value of 4th game: 10
Value of 5th game: 5
Assume the team has a zero marginal cost per fan of supplying games.
(a) What will the team’s total home attendance be if it sets a single game price of $25? What will its total revenue be?
(b) What is the maximum amount that a multi-game fan will pay for a season ticket?
(c) Suppose the team sets the price of individual game tickets at $25, but offers season tickets at the price you computed in (b). What is the team’s total home attendance, and what is its total revenue? How do your answers compare to part (a)?