Question

Promoters of a major college basketball tournament estimate that the demand for tickets by adults is qa = 5,000 - 10p and the demand for tickets by students is qs = 10,000 - 100p. the marginal cost and average total cost of seating an additional spectator is constant, mc = $10, the promoters want to segment the market and charge adults and students different prices. what is the profit generated by the ticket sales to adults?

Answer 1

To determine the profit generated by the ticket sales to adults, we need to calculate the total revenue and subtract the total cost. The quantity of tickets sold to adults is 0, resulting in a profit of $0.

Step-by-step explanation:

To determine the profit generated by the ticket sales to adults, we need to calculate the total revenue and subtract the total cost. The total revenue is the product of the ticket price and the quantity of tickets sold to adults. The total cost is the product of the marginal cost and the quantity of tickets sold to adults.

Let's start by finding the quantity of tickets sold to adults at the profit-maximizing price. To find this, we equate the demand equation for adults to the marginal cost:

5,000 - 10p = 10

Solving for p, we get:

p = 500

Plugging this value of p back into the demand equation, we can find the quantity of tickets sold to adults:

qa = 5,000 - 10(500) = 5,000 - 5,000 = 0

Since the quantity of tickets sold to adults is 0, the profit generated by the ticket sales to adults is $0.