The Norman Jaguars, a minor league baseball team,has recently hired you asits new marketing coordinator. The team would like to increase the profitability of home games by using marketing tools such as promotional giveaways. You have conducted some preliminary market research to determine which promotional items generate the best returns, and have recommended offering souvenir baseball hats during an upcoming game.

The team owners tellyouthat all tickets for the upcoming season will be sold at $7.00, and only general admission seating will be available. The average game draws 800 fans to the ballpark, each of whom purchases a ticket. Your research shows that minor league teams in your region typically double their average attendanceon baseball hat giveaway nights. As such, the ownersare projecting that the team will sell 1,600 tickets for this game.

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The owners have found a supplier who can produce the souvenir Jaguar baseball hats for $3.10 per unit, as long as the team orders a minimum of 1,000 units. The team ownersare reluctant to spend thousands of dollars on this new promotion andhave asked you to show profit and revenue numbers for baseballhat promotion night.

The purpose of this exercise is to learn how the variation of cost, total revenue, and quantity can determine price. Recall that:

Profit = Total Revenue - Total Costs. Total Revenue (TR) = Price (P) x Quantity Sold (Q).

1.If the teambuys 1,600 baseball hats, what is the total cost of the promotion?

multiple choice 1

• $4,960
• $3,200
• $275
• $9,440
• $2,105

2.If attendance increases to 1,600 for the giveaway game, what is the total revenue for ticket sales?

multiple choice 2

• $8,750
• $9,500
• $11,200
• $2,000
• $14,400

3.What is the revenue for the Jaguars when they have an average attendance of 800 people buying tickets?

multiple choice 3

• $3,100
• $5,600
• $11,200
• $10,000
• $6,400

4.What would be the profit increase associated with the baseball hat giveaway night, compared to the average revenue for a Jaguars game?

multiple choice 4

• $0
• $199
• $1,050
• $3,300
• $640

5.What would be the profit increase associated with the baseball hat giveaway night, compared to the average revenue for a Jaguars game, if you were able to find a supplier who could produce the baseball hats for $2.55 per unit?

multiple choice 5

• $1,280
• $2,440
• $0
• $5,081
• $1,520

6.When the number of tickets sold (Q)increased from 800 to 1,600, which of the following is true?

multiple choice 6

• profit decreased
• cost of promotional item decreased
• price increased
• total revenue increased

7. Based on the data above, you conclude that providing an incentive

multiple choice 7

• increased the total profit.
• increased the total quantity of tickets sold.
• increased the total revenue.
• All of the answers are correct.