Plinking
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Can anyone help with this question?

Suppose the demand and supply schedules for the tickets to see Newcastle United playing at home is as follows:
Price(£) Quantity demanded Quantity supplied
10 -----------------80,000 -----------------50,000
20 -----------------70,000 -----------------50,000
30 -----------------50,000 -----------------50,000
40 -----------------40,000 -----------------50,000

Question) Calculate the revenue at each price. Suppose the cost is the same no matter how many tickets are sold. Suppose the tickets sales is operating as a monopoly, what price will be charged?
Last edited by Plinking; 6 months ago
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MindMax2000
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Question) Calculate the revenue at each price.
revenue = price * (the smaller of quantity demanded and 50K i.e. quantity supplied)


Suppose the cost is the same no matter how many tickets are sold. Suppose the tickets sales is operating as a monopoly, what price will be charged?
In a monopoly, MR = AR. You want MR=MC for profit maximisation. As there is no information in the question for this, consider the price that offers you the maximum revenue based on your answer above; should be £30.
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Plinking
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(Original post by MindMax2000)
Question) Calculate the revenue at each price.
revenue = price * (the smaller of quantity demanded and 50K i.e. quantity supplied)


Suppose the cost is the same no matter how many tickets are sold. Suppose the tickets sales is operating as a monopoly, what price will be charged?
In a monopoly, MR = AR. You want MR=MC for profit maximisation. As there is no information in the question for this, consider the price that offers you the maximum revenue based on your answer above; should be £30.
Thank you very much for your answer. Can you kindly explain in a little more detail why MR= AR and not MR<AR?
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MindMax2000
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(Original post by Plinking)
Thank you very much for your answer. Can you kindly explain in a little more detail why MR= AR and not MR<AR?
Sorry, my mistake. Should be AR>MR under monopolistic conditions.
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Plinking
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how do you calculate Marginal revenue in this question?

Difference in total revenue/ difference in quantity
but quantity is always 50k, so difference is 0
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MindMax2000
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(Original post by Plinking)
how do you calculate Marginal revenue in this question?

Difference in total revenue/ difference in quantity
but quantity is always 50k, so difference is 0
I don't think you would be able to figure that out based on the information in the question.
I'd put down the price that produces the maximum revenue.
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Plinking
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(Original post by MindMax2000)
I don't think you would be able to figure that out based on the information in the question.
I'd put down the price that produces the maximum revenue.
ok thank you!
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