Asked by Gabriella Lanzillotta on Sep 24, 2024
Verified
A football stadium has a fixed number of seats.Given this,how should stadium management determine ticket prices?
A) When MR<MC,do not price to fill capacity
B) When MR<MC,price to fill capacity
C) When MR>MC,price to fill capacity
D) Both A&C
Fixed Number
A constant value or quantity that does not change in a given context or scenario, often used in mathematical or economic models.
Stadium Management
The administration and operation of a stadium, including event scheduling, maintenance, and security.
- Comprehend the critical role that marginal revenue and marginal cost play in pricing strategies.
- Learn about the application of pricing strategies in capacity-limited contexts, with an emphasis on increasing revenue.
Verified Answer
VG
Vania Garcia4 days ago
Final Answer :
D
Explanation :
The correct approach to pricing in this scenario involves understanding the relationship between Marginal Revenue (MR) and Marginal Cost (MC). When MR < MC, it's not economically beneficial to aim for full capacity since the cost of serving an additional customer is higher than the revenue they bring. Conversely, when MR > MC, pricing to fill capacity is advantageous because each additional customer adds more to revenue than to costs. Therefore, both A and C are correct strategies depending on the MR and MC conditions.
Learning Objectives
- Comprehend the critical role that marginal revenue and marginal cost play in pricing strategies.
- Learn about the application of pricing strategies in capacity-limited contexts, with an emphasis on increasing revenue.
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