Unformatted text preview: Profit Maximization Exercise Section (2pm or 3:30pm): This exercise asks you to integrate your understanding of demand curves and their relationship to a firm's revenue with the firm's cost structure in order to maximize profit. In this case, the firm is the University Mall discount theaters. You've already estimated the ticket demand curve for the firm. Use this as your guide to creating the firm's total ticket revenue function. (If you wish, you may use the demand curve in the solution to the demand exercise (found below) if different from the one you estimated). Also estimate concession demand from Part II of the previous demand exercise. (This is also done for you below if you would like to use this function). Also listed below are summary cost data based on the actual costs at the theater by volume. (These include concession costs already embedded at varying demand based on ticket price). You will develop a ticket pricing policy to maximize profit based on firm demand and costs (Use the spreadsheet to maximize profits, not calculus on this one) Complete the exercises below: Be sure to label ALL charts with a title. Be sure to label ALL charts with a title....
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- Fall '11
- Revenue, $2, $ 1,000.00, $0 200 400 600 800 1000 1200, $1,373 976 692 491 358 247 175 125, $ 1,400 126