Determine profit maximization

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Reference no: EM1372679

Suppose you have been employed by FIFA to recommend on pricing of tickets for the World Cup Final on 11th July 2010 to be played at Soccer City Johannesburg, a stadium with seating capacity of 88,460. You have been told that the objective is to set a ticket price that will maximise total revenue, given that the marginal cost of an extra spectator is zero. From the demand curve you calculate that revenue is maximised at a ticket price of $200 and that total demand at this price is 80,000, leaving 8,460 seats unsold. Assuming all this information is correct, discuss whether there are ways in which ticket revenues could be increased. (50%)

b) Could FIFA increase its total revenues by selling tickets at prices below the ticket revenue maximising level? Would this also be profit maximising? (50%)

Reference no: EM1372679

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