In: Economics
A semiprofessional baseball team near your town plays two home games each month at the local baseball park. The team splits the concessions 50/50 with the city but keeps all the revenue from ticket sales. The city charges the team $500 each month for the three-month season. The team pays the players and manager a total of $2500 each month. The team charges $10 for each ticket, and the average customer spends $7 at the concession stand. Attendance averages 100 people at each home game.
Part 1. The team earns an average of $________________ in
revenue for each game and $______________ of revenue each
season.
With total costs of $_____________ each season, the team finishes
the season with $________________ of profit.
Part 2 In order to break even, the team needs to sell tickets for each game. Round to the nearest whole number.
Solution:-
Part 1:-
Team earns $ 10 for each ticket and 100 people attend a game and spend $7 on concession stand but due to 50/50 sharing, team receives only $7/2 =$3.5 out of this
Thus,
Per customer revenue of team =$10 + $3.5=$13.5
Total revenue per game = Per customer revnue of team – No. of people
=13.5* 100=$1350
Total No. of matches in season= 2*3=6
For a season of 6 games, total revenue= $1350*6=$8100
Total Cost= City Charge + Player and management cost
= ($500*3) + ($2500*3)
=$1500+$7500
=$9000
Profit = Total Revenue – Total Cost
=$8100 -$9000
= -$900
Its means Loss of $900
Hence,
The team earns an
average of $1350 in revenue for each game
and $8100 of revenue each
season.
With total costs
of $9000 each season, the team finishes the season
with $-900 of profit.(Or loss of
$900)
Part:-2
Let n be
the no. of tickets sold for break even.
For
Breakeven
Cost = Revenue
9000 = 13.5*6*n
n = 9000/13.5*6
n = 9000/81
n = 111.11 or 111
Hence,
In order to breakeven, the team needs to sell 111 ticket for each game.