Question 1:
Your boss, who is the general manager of the Pontiac Rangers, an adequate AA baseball team, has heard that you are taking a principles of economics course, and has asked you to research the demand for summer night games. She has surveyed a sample of 10 people whom she feels accurately represent the potential market. We will assume that they do as well. The results of the survey are presented below:
Number of Night Games Willing to Attend at Various Prices
Name $5.00 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00
Arvilla 1 2 2 3 3 4 5
Quintha 3 4 5 6 7 7 8
Mary 0 0 1 2 3 5 5
Ray 5 5 5 5 5 6 7
Vern 0 0 0 1 3 3 3
Fran 5 5 5 5 5 5 5
Jerry 2 2 2 2 3 3 3
Richard 5 5 6 6 6 7 8
Whitey 3 6 8 8 8 8 8
Windy 6 6 6 7 7 7 8
a. What ticket price will maximize total revenue for the team?
b. Using the midpoint formula, what is the price elasticity of demand between $2.50 and $2.00?
c. The local bowling alley has extended league play on Wednesday night. Is the cross elasticity of demand positive or negative between night baseball and bowling? If the manager scchedules night games on Wednesday will that affect attendance at the game
Question 2 Consider chip plants: potato and computer. Assume there is a large rise in the demand for computer chips and potato chips.
a. How responsive to demand is each in the market period?
b. Describe what a manufacturer of each product might do in the short run to increase production.
c. How does the long run differ for these products?