25.0k views
4 votes
A baseball team plays in a stadium that holds 58000 spectators. with the ticket price at $10 the average attendance has been 22000. when the price dropped to $7, the average attendance rose to 29000. assume that attendance is linearly related to ticket price.

User Bob Ren
by
7.4k points

1 Answer

2 votes

Final answer:

To maximize revenue, apply the concept of price elasticity of demand and calculate the slope of the demand line from given points. Then find the revenue function and solve for the ticket price at the vertex of the revenue parabola.

Step-by-step explanation:

The question asks about determining the ticket price that would maximize revenue for a baseball team, given that attendance is linearly related to ticket price. To find this, we need to apply the concept of price elasticity of demand, which ties into total revenue – the product of the price per ticket and the number of tickets sold. Since we have two price points ($10 with 22000 attendees and $7 with 29000 attendees), we can calculate the slope of the demand line, and then determine the ticket price corresponding to the vertex of the parabola represented by the revenue equation, which in turn will give us the price that maximizes revenue.

First, we calculate the slope of the demand line with the given points: (10, 22000) and (7, 29000). Then, we find the revenue function R(p) = p × D(p), where D(p) represents the number of tickets sold at a price p, and R(p) represents the total revenue. The maximized revenue occurs where the derivative dR/dp equals zero, which should give us the optimal ticket price. The exact math and calculations would depend on additional information from algebra or calculus to solve for the vertex of the revenue parabola.

User Kwan
by
7.6k points