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short-run profit maximizing equilibrium graphically for a sports team

Show the short-run profit maximizing equilibrium graphically for a sports team facing a negatively sloped linear demand with a short-run total cost function (SRTC) of the form: SRTC = TFC + TVC = TFC + α A, where TFC is total fixed cost; TVC is total variable cost; A is attendance and α > 0 is a constant. On your diagram identify equilibrium attendance, the price of tickets and profit. Assume there are positive profits over some range of attendance.

Solution Summary

A short-run profit maximizing equilibrium graphically for a sports team is depicted.

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