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November 28, 2022

Consider the following demand curves (where P is price in dollars and Q is quantity in units):

Consider the following demand curves (where P is price in dollars and Q is quantity in units):

(A) Q = 200 – P

(B) Q = 200 – 0.5P

Calculate the own price elasticity of demand, at a price of $20, for each of the demand curves.

Question 2

. [10 points] The owner of a baseball team and local stadium has commissioned a study that showed the demand by fans for stadium seats (per playing date) to be P = 22 – 0.2Q, where P is the average price of a ticket and Q represents the number of seats (expressed in thousands). The local stadium seats a maximum of 56,000 per game. Suppose the owner offers you 10% of the revenues. If you can only choose a uniform per-ticket price, what is the maximum amount you can earn per game? (Note: Assume that all seats and all games are the same in this problem.)

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