Highest possible total revenue

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Reference no: EM138700

Q. A consulting firm estimates the demand by local businesses for attendance at a pro sports team's games:
PB = $140 - 4AB where PB is the ticket price paid by businesses, measured in dollars, and AB is their attendance measured in thousands of fans.

a. Draw this attendance demand function.

b. Using this demand function, find the total revenue function. What
is the shape of the total revenue function? What is the highest possible total revenue that the team can hope to collect? At what level of attendance? At what price?

c. Using this demand function and your answer to part (b), what is the elasticity of demand at the revenue maximizing attendance level?

d. Using your answers to a-c, if capacity at the team's stadium is 25,000 seats, should the team owner fill the stands with business buyers? Why or why not?

Reference no: EM138700

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