(4) Give the Queen what she wants?

Beyonce has just announced a new concert at Madison Square Garden. She sells her tickets to her fans through her fan club website. Estimates from her previous New York concerts suggest that the inverse demand for this show will be given byP(Q) = 5000 Q/5.

Madison Square Garden charges artists $5,000,000 to rent the venue. In addition, MSG charges performers a per-attendee fee of $10 to cover security, clean up, and other overhead, and has a maximum capacity of 18,000 fans. When Beyonce is not putting on her own concerts, she has a standing offer to put in an appearance at random Hamptons parties for $400,000.

(a) Beyonce is clearly a monopoly provider of Beyonce concerts. What price should a profit maximizing Beyonce set?

(b) At this price, what is her total (economic) profit, net of all costs?

(c) You are Beyonce's manager. She tells you that she really dislikes seeing empty seats when she performs. What price should you charge to ensure Beyonce performs to a full house? Explain.

(d) Beyonce says she would rather give up $5 million than perform to a crowd with a single empty seat. What price should you set for tickets to her MSG show?