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The New York-area MLS (Major League Soccer) team, Red Bulls (formerly MetroStar), plays in a newly built soccer-specific stadium located in Harrison, New Jersey. The new stadium has a 25,000 seating capacity. If the average ticket price is $30, the average attendance per game is 15000. When the ticket price is $25, the average attendance is 20000.

(a) Find the demand function for the team's ticket, assuming it is linear.

(b) What price should the team charge for a ticket in order to maximize revenue?

(c) What would the attendance be at the revenue maximizing ticket price?

(d) Show that the price elasticity of demand at the revenue maximizing price and quantity is 1.

Microeconomics, Economics

  • Category:- Microeconomics
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