Question

The concert promoters of a heavy-metal band, WeR2Loud, know that there are two types of concert-goers: die-hard fans and casual fans. For a particular WeR2Loud concert, there are 1,000 die-hard fans who will pay $150 for a ticket and 500 casual fans who will pay $50 for a ticket. There are 1,500 seats available at the concert venue. Suppose the cost of putting on the concert is $50, 000, which includes the cost of the band, lighting, security, etc. How much profit will the concert promoters earn if they set the price of each ticket at $50?

A. $150, 000
B. $75,000
C. $25,000
D. $100, 000

Answer 1

C

Step-by-step explanation:

Profit = total revenue - total cost

If price is set at $50, both the die hard and casual fans would pay because the price is below or equal to their willingness to pay

willingness to pay is the highest amount a consumer is willing to pay for a product

(50 x 1500) - 50,000 = 25,000