During a five-year period, the ticket sales of a city’s professional basketball team have increased 30 percent at the same time that average ticket prices have risen by 50 percent. Do these changes imply an upward-sloping demand curve? Explain.
During a five-year period, the ticket sales of a city’s professional basketball team have increased 30 percent at the same time that average ticket prices have risen by 50 percent. Do these changes imply an upward-sloping demand curve? Explain.
A retail store faces a demand equation for Roller Blades given by: Q = 180 − 1.5P, where Q is the number of pairs sold per month and P is the price per pair in dollars. a. The store currently charges P = $80 per pair. At this price, determine the number of pairs sold. b. If management were to raise the price to $100, what would be the impact on pairs sold? On the store’s revenue from Roller Blades? c. Compute the point elasticity of demand first at P = $80, and then at P = $100. At which price is demand more price sensitive?
Management of McPablo’s Food Shops has completed a study of weekly demand for its “old-fashioned” tacos in 53 regional markets. The study revealed that Q = 400 − 1,200P + .8A + 55Pop + 800Pc, Where Q is the number of tacos sold per store per week, A is the level of local advertising expenditure (in dollars), Pop denotes the local population (in thousands), and Pc is the average taco price of local competitors. Page 3 of 3 For a particular McPablo’s outlet, P = $1.50, A = $1,000, Pop = 40, and Pc = $1. a. Estimate the weekly sales for this McPablo’s outlet. b. What is the current price elasticity for tacos? What is the advertising elasticity? c. Should McPablo’s raise its taco prices? Why or why not?
As economic consultant to the dominant firm in a particular market, you have discovered that, at the current price and output, demand for your client’s product is price inelastic. What advice regarding pricing would you give?
A minor league baseball team is trying to predict ticket sales for the upcoming season and is considering changing ticket prices.
a. The elasticity of ticket sales with respect to the size of the local population is estimated to be about .7. Briefly explain what this number means.
b. If the local population increases from 60,000 to 61,500, what is the predicted change in ticket sales?
c. Currently, a typical fan pays an average ticket price of $10. The price elasticity of demand for tickets is −.6. Management is thinking of raising the average ticket price to $11. Compute the predicted percentage change in tickets sold. Would you expect ticket revenue to rise or fall?
d. The typical fan also consumes $8 worth of refreshments at the game. Thus, at the original $10 average price, each admission generates $18 in total revenue for team management. Would raising ticket prices to $11 increase or reduce total revenue? Provide a careful explanation of your finding.
Triplecast was NBC’s and Cabelvision’s joint venture to provide pay-per-view cable coverage of the 1992 Summer Olympics in Barcelona. Based on extensive surveys of potential demand, the partners hoped to raise $250
a) Goal and problem in price decision Making
b) Unlimited access and cost
During the 1990’s, Apple Computer saw its global share of the personal computer market fall from above 10 percent to less than 5 percent. Despite a keenly loyal customer base. Apple found it more and more difficult to compete in a market dominated by the majority standard: PC’s with Microsoft’s Window’s
A New Hampshire resort offers year round activities: in winter, skiing, and other cold-weather activities and in summer, golf, tennis, and hiking.
Explain how a firm can increase its profit by price discriminating. How does it determine optimal prices?
A private-garage owner has identified two distinct market segments: short-term parkers and all day parkers with respective demand curves of Ps -= 3 – (Qs/200) and Pc = 2 – (Qc/200).
-IN what respects are the following common practices subtle, or not so subtle, forms of price discrimination?
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