A university football team estimates that it faces the demand schedule shown for tickets for each home game it plays. The team plays in a stadium that holds 60,000 fans. It estimates that its marginal cost of attendance, and thus for tickets sold, is zero.

Price per ticket	Tickets per game
$100	0
80	20,000
60	40,000
40	60,000
20	80,000
0	100,000

1. Draw the demand and marginal revenue curves. Compute the team’s profit-maximizing price and the number of tickets it will sell at that price.

2. Determine the price elasticity of demand at the price you determined in part (a).

3. How much total revenue will the team earn?

4. Now suppose the city in which the university is located imposes a $10,000 annual license fee on all suppliers of sporting events, including the University. How does this affect the price of tickets?

5. Suppose the team increases its spending for scholarships for its athletes. How will this affect ticket prices, assuming that it continues to maximize profit?

6. Now suppose that the city imposes a tax of $10 per ticket sold. How would this affect the price charged by the team?