Scenario 15-6
The concert promoters of a heavy-metal band, WeR2Loud, know that there are two types of concert-goers: die-hard fans and casual fans. For a particular WeR2Loud concert, there are 1,000 die-hard fans who will pay $150 for a ticket and 500 casual fans who will pay $50 for a ticket. There are 1,500 seats available at the concert venue. Suppose the cost of putting on the concert is $50,000, which includes the cost of the band, lighting, security, etc.
-Refer to Scenario 15-6. How much profit will the concert promoters earn if they engage in price discrimination?

Question

Quizplus · Accepted Answer

The promoters can charge $150 to the 1,000 die-hard fans and $50 to the 500 casual fans. Total revenue is (1,000 x $150) + (500 x $50) = $150,000 + $25,000 = $175,000. Subtracting the cost of $50,000, the profit is $175,000 - $50,000 = $125,000.

Scenario 15-6 The Concert Promoters of a Heavy-Metal Band, WeR2Loud, Know That