Use the following information to answer the questions:
The accompanying figure depicts the demand (D) curve for general admission concert tickets to see ECON-Jammin', the world's first economics rock band, which is scheduled to visit your city next month. The concert venue can accommodate 100 fans with a marginal cost (MC) of $10 per person.
-ECON-Jammin' has recently discovered that its fans are made up of two distinct groups, which they can easily distinguish. They have decided to utilize their economic knowledge and offer a high-priced ticket of $40 per person and a low-priced ticket of $20 per person. Based on this information, what is the net revenue earned by the sales of the low-priced ticket?

Question

Use the following information to answer the  questions:
The accompanying figure depicts the demand (D) curve for general admission concert tickets to see ECON-Jammin', the world's first economics rock band, which is scheduled to visit your city next month. The concert venue can accommodate 100 fans with a marginal cost (MC) of $10 per person. 
-ECON-Jammin' has recently discovered that its fans are made up of two distinct groups, which they can easily distinguish. They have decided to utilize their economic knowledge and offer a high-priced ticket of $40 per person and a low-priced ticket of $20 per person. Based on this information, what is the net revenue earned by the sales of the low-priced ticket?

Quizplus · Accepted Answer

To determine the best choice, we need to compare the total revenue earned from selling high-priced tickets to the total revenue earned from selling low-priced tickets.

Using the demand curve, we can see that at a price of $40, the quantity demanded is 20 tickets, and at a price of $20, the quantity demanded is 60 tickets.

Total revenue earned from selling high-priced tickets: 
20 tickets x $40 per ticket = $800

Total revenue earned from selling low-priced tickets: 
60 tickets x $20 per ticket = $1,200

Therefore, the best choice is to only sell low-priced tickets, as they generate more revenue.

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