Q1) Owner of Los Angeles Dodgers has commissioned study that illustrated the demand by fans for stadium seats (per playing date) to be P = 22 - 0.2Q,
where P is average price of ticket and Q represents number of seats (expressed in thousands). Dodger Stadium seats maximum of 56.000 per game. Price has been set by owner at $10 per ticket. (Note: We are suppose for simplicity that all seats are same in this problem. Same analysis would apply for each kind of seat otherwise.)
a. How much revenue does owner make at current price?
b. Suppose that owner of Los Angeles club is first and foremost interested in maximizing revenue, has owner overpriced or underpriced tickets to Dodger games? (Note, marginal revenue in this case is given by MR = 22 - 0.4Q)
c. Owner comes to you and says he will give you 10% of any increase in revenues that you can make for him this coming season. Provided that you can only charge per ticket price, how much money can you expect to make per game during coming season?
d. is there optimal number of empty seats (per playing date) from owner's point of view? If so, what is it?