Suppose that the price of tickets to see your local football team play at home is determined by market forces. Currently, the demand and supply schedules are as follows:

a. Draw the demand and supply curves. What is unusual about this supply curve? Why might this be true?

b. What are the equilibrium price and quantity of tickets?

c. Your team plans to increase total capacity in its stadium by 5,000 seats next season. What admission price should it charge if it wants to maximize total revenue?

d. What is the price elasticity of demand and supply for an increase in price from €30 to €40? (Use whatever method you think is most appropriate for this example.)

e. As a result of the calculation made in 5d. above, what would you recommend the owners of the club do if there are consistently empty seats in the stadium and they want to maximize revenue?

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Price () Quantity demanded Quantity supplied 10 50,000 30,000 20 40,000 30,000 30 30,000 30,000 40 20,000 30,000 50 10,000 30,000