2018 May (PES, Output/Costs/Revenues) Paper 3 HL

2018 May (PES, Output/Costs/Revenues) 

Paper 3 HL

 

(i)            State the value of the PES for tickets to the 2018 Football World Cup final.

 

Value of the PES = 0 (No matter the price change the Qs will not change as there are only 80k seats)

(j) In the diagram draw and label the supply curve for tickets at the 2018 Football World Cup Final.

(k) Draw and label the marginal revenue curve for the 2018 Football final.

(i) Using the diagram on page 6, and your answers to parts (j) & (k) explain how the organizers could achieve their goal of profit maximization.

Profits are maximized where MR = MC )or where TR-TC is maximised

MC = 0 is this case (since there are no variable costs (only fixed) maximium profit will occur at the same quantity as maximum revenue = MR = 0

Profits will therefore be maximized where Q = 60,000

at a price of $800