Question

In: Economics

A semiprofessional baseball team near your town plays two home games each month at the local...

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.

Solutions

Expert Solution

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.


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