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Consider the following simplied scenario. Imagine that the Australian national rugby union (for short. Rugby A U) has exclusive rights to organize the games played
Consider the following simplied scenario. Imagine that the Australian national rugby union (for short. Rugby A U) has exclusive rights to organize the games played by the national team. Rugby AU decides that the next match. between the Wallabies and the All Blacks (i.c., the Australian and the New Zeeland national rugby teams). will be hosted at the Marvel Stadium in Melbourne. Rugby AU has no xed costs for organizing the game, but it must pay a marginal cost MC of $20 per seat to the owners of the Marvel Stadium. Two types of tickets will be sold for the game: concession and cllfare. Based on any official document that attests to their age, children and pensioners qualify to purchase concession tickets that offer a discounted price; everyone also pays the full fare. The demand for full-fare tickets is QFU') = I20 ~ 2P. The demand for concession tickets is QdP) = 80 21'. b) Use a diagram to illustrate the producer surplus PSI- that Rugby A U enjoys, the consumer surplus of the full fare paying customers CSF, and the deadweight loss DWLF in this market. Then. compute CS; and DWLF. (6 points)
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