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Calculate amount of deadweight loss to society

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Reference no: EM133416292

Assume that a professional sports team is a profit-maximizing (but not a price-discriminating) monopolist. Assume the inverse demand for Bckets is given by P = 12 - 0.75Q.

Assume that the marginal cost of selling another tickets is constant and equal to ($3) per bucket sold, and fixed costs are $19. Assume there are no capacity constraints.

1. Draw a completely labeled graph of the situation described above.

2. Calculate the optimal price, number of tickets sold, consumer surplus, and team profits.

3. Calculate the amount of deadweight loss to society from not having perfect competition tickets.

4. Now, assume the team can identify the maximum willingness to pay for each unique consumer (that is, the team is a perfect price-discriminating monopoly). How many tickets will it sell and at what price?

5. For the price-discriminating monopoly, illustrate in your graph and calculate the consumer surplus and the deadweight loss.

Reference no: EM133416292

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