The NBA has established a monopoly in the market for Finals basketball tickets. Assume that there...

The NBA has established a monopoly in the market for Finals basketball tickets. Assume that there are 100,000 consumers in the market for Finals tickets and that each has the individual demand function x as follows. Imagine that your costs are modeled by the cost function C(Q) below: x = 0.02 – 0.001 Px + 0.0005 I – 0.004 Py C (Q) = 5 Q 2 – 10 Q + 2,500,000 a. What is the Market Demand? Solve this for Px in terms of QD when Py = 1,000 and I = 10,000. b. What is TR? What is MR? What is MC? c. What is the profit-maximizing choice of output (quantity) for Finals tickets? d. What is the profit-maximizing price your firm should charge for Finals tickets? e. Given the equilibrium quantity and price from c and d, what is the NBA’s profit or loss? f. Graphically depict this market in its current equilibrium. Is it possible for the NBA to make this profit/loss in the long run? Why? g. What is the (own) price elasticity for market demand? What does this mean economically? Is this elastic or inelastic? h. What is the cross-price elasticity for market demand? What does this mean economically? Is this a substitute or a complement? i. What is the income elasticity for market demand? What does this mean economically? Is this normal or inferior? j. Explain how would this market be different if it were perfect competition?

Expert Solution

Rahul Sunny answered 2 years ago

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