View the step-by-step solution to:

A baseball team's attendance depends on the number of games it wins per season and on the price of its tickets.

1. A baseball team’s attendance depends on the number of games it wins per season and on the price of its tickets. The demand function it faces is Q = N(20 - p), where Q is the number of tickets (in hundred thousands) sold per year, p is the price per ticket, and N is the fraction of its games that the team wins. The team can increase the number of games it wins by hiring better players. If the team spends C million dollars on players, it will win .7 - 1/C of its games. Over the relevant range, the marginal cost of selling an extra ticket is zero.
a. Write an expression for the firm’s profits as a function of ticket price and expenditure on players.
b. Find the ticket price that maximizes revenue.
c. Find the profit-maximizing expenditure on players and the profit-maximizing fraction of games to win.

This question was asked on Mar 22, 2010.

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors and customizable flashcards—available anywhere, anytime.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access or to earn money with our Marketplace.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
  • -

    Flashcards

    Browse existing sets or create your own using our digital flashcard system. A simple yet effective studying tool to help you earn the grade that you want!

    Browse Flashcards