Question
Inverse demand for season tickets at the University of Arkansas football games is P = 100 - 0.25Q,, where Q is quantity of tickets (in
Inverse demand for season tickets at the University of Arkansas football games is P = 100 - 0.25Q,, where Q is quantity of tickets (in lO0's.) The marginal cost of supplying tickets is constant at MC= 10.
a.Find the profit maximize P and Q if the university acts like a single-price non discriminating monopolist.
b.The university now requires all season ticket buyers to contribute into the "VIP Athletic Club" for the right to purchase a season ticket (two-part pricing) plus the price of a season ticket that you found in part a above. What is the maximum amount that it can charge for VIP Club? Compare the profits to part (a).
c.A staff member at the university athletic department suggests that the team can increase profits with an even lower per-unit price equal to competitive (P = MC) but higher VIP Club fee? What season ticket price and VIP Club fee maximizes profits?
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