Question

The Maize Eagles are evaluating ticket prices for its basketball games. Studies show that Friday and Saturday night games average more than twice the number of fans compared to other days. The following information pertains to the​ stadium's normal operations per​ season:

Average fans per game​ (all games)	​2,500 fans
Average fans per Friday and Saturday night games	​3,500 fans
Number of home games per season	30 games
Stadium capacity	​3,500 seats
Variable operating costs per operating hour	​$3,000
Marketing costs per season for basketball	​$139,500
​Customer-service costs per season for basketball	​$25,000

The stadium is open for 4 operating hours on each day a game is played. All employees work by the hour except for the administrators. A maximum of one game is played per day and each fan has only one ticket per game.

The stadium authority wants to charge more for games on Friday and Saturday. What is the minimum price that should be charged for peak attendance​ nights?

Answer 1

Minimum price that should be charged for peak attendance nights is $6.99. Total fixed and variable cost that is incurred per game is $17,483.33 irrespective of number of fans occupied. Since margin is not provided in the question, it has not been considered.

Number of Fans (A)	2500	3500
Fixed Cost
Marketing costs per season for basketball (139500/30)	4,650.00	4,650.00
Customer-service costs per season for basketball (25000/30)	833.33	833.33
Total Fixed Cost (B)	5,483.33	5,483.33
Variable Cost (C)
Variable Operating Cost (3000*4 Hours)	12,000.00	12,000.00
Total Cost D = B+C	17,483.33	17,483.33
Per Ticket Cost (D/A)	6.99	5.00