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What would elasticity be if baseball club maximize revenue

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Reference no: EM131485455

Question: Monopolies versus revenue-maximizers. Are major-league baseball clubs profit-maximizing monopolies? Some observers of this market contend that baseball club owners want to maximize attendance or revenue, instead of maximizing profits.

(a) What would the elasticity be if a baseball club were maximizing revenue? (Hint: Write down the formula for total revenue, and use calculus to maximize it. It may help to look at the derivation of the Lerner index.)

(b) Alexander (2001) said that one test of whether a firm is a profit-maximizing monopoly is to check whether it is operating in the elastic portion of its demand curve, which, according to his analysis, is true. Why is this a relevant test?

Reference no: EM131485455

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