Variable ticket pricing is widely used in the EPL. There are two upcoming matches for an...

Transcribed Image Text:

Variable ticket pricing is widely used in the EPL. There are two upcoming matches for an EPL team, one is a low demand game and the other a high demand game. Suppose for both games, the EPL team can charge a low price of £70, an intermediate price of £80 and a high price of £90. Given the total attendance for both games for the low price would be 60,000; 55,000 for the intermediate price and 50,000 for the high price. Show that if the EPL team practice variable pricing with price set at £70 for the low demand game with attendance of 25,000 and £90 for a high demand game with an attendance of 35,000, revenue would be maximized. Question 2: Monopoly and Perfect Competition in Sports Suppose that the demand curve for tickets to see a football team is given by Q = 100,000 - 100P and marginal cost (MC) is 0. a) How many tickets would the team be able to sell (ignoring capacity constraints) if it behaved competitively and set P = MC? b) How many tickets would it sell - and what price would it charge - if it behaved like a monopoly. (Hint: in this case the marginal revenue curve is MR = 1000 -0.02Q.) Question 3: The Public Finance of Sports: Who Benefits and How? a) If the marginal propensity to consume in a municipality is 0.80, what is the value of the simple multiplier? If new stadium that adds £50 million in new consumption expenditures is built, what is the impact on the economy based on this multiplier? b) Suppose the Marginal Propensity to Import is 0.40, what happens to the multiplier and to the impact on the economy? Variable ticket pricing is widely used in the EPL. There are two upcoming matches for an EPL team, one is a low demand game and the other a high demand game. Suppose for both games, the EPL team can charge a low price of £70, an intermediate price of £80 and a high price of £90. Given the total attendance for both games for the low price would be 60,000; 55,000 for the intermediate price and 50,000 for the high price. Show that if the EPL team practice variable pricing with price set at £70 for the low demand game with attendance of 25,000 and £90 for a high demand game with an attendance of 35,000, revenue would be maximized. Question 2: Monopoly and Perfect Competition in Sports Suppose that the demand curve for tickets to see a football team is given by Q = 100,000 - 100P and marginal cost (MC) is 0. a) How many tickets would the team be able to sell (ignoring capacity constraints) if it behaved competitively and set P = MC? b) How many tickets would it sell - and what price would it charge - if it behaved like a monopoly. (Hint: in this case the marginal revenue curve is MR = 1000 -0.02Q.) Question 3: The Public Finance of Sports: Who Benefits and How? a) If the marginal propensity to consume in a municipality is 0.80, what is the value of the simple multiplier? If new stadium that adds £50 million in new consumption expenditures is built, what is the impact on the economy based on this multiplier? b) Suppose the Marginal Propensity to Import is 0.40, what happens to the multiplier and to the impact on the economy?

Answer rating: 100% (QA)

1 Variable Pricing for EPL Team To show that revenue would be maximized if the EPL team practices variable pricing we need to compare the total revenu... View the full answer