1 an increase in labor costs in the market in which the firm operates a reduction in the price of gasoline the firm’s Chief Executive Officer persuades the Board to increase his or her annual salary demand for the firm’s product falls demand for the firm’s product rises the price of a substitute for the firm’s product rises NUMERICAL PROBLEMS A university football team estimates that it faces the demand schedule shown for tickets for each home game it plays The team plays in a stadium that holds 60,000 fans It estimates that its marginal cost of attendance, and thus for tickets sold, is zero Price per ticket Tickets per game $100 80 20,000 60 40,000 40 60,000 20 80,000 100,000 Draw the demand and marginal revenue curves Compute the team’s profit-maximizing price and the number of tickets it will sell at that price Determine the price elasticity of demand at the price you determined in part (a) How much total revenue will the team earn? Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 564