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? a. $100,000b. $125,000c. $150,000d. $175,000

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Business

Joanna Butler

17 December, 17:12

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? a. $100,000b. $125,000c. $150,000d. $175,000

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Julianne Barron · Answer 1

B) $125,000

Explanation:

Price discrimination strategy refers to charging each customer the maximum amount of money he/she is willing to pay for a product.

In this case, the concert promoters should charge $150 per ticket to 1,000 die hard fans = $150,000 in revenue.

Then it should charge only $50 per ticket to 500 casual fans = $25,000 in revenue.

Total revenue = $150,000 + $25,000 = $175,000

minus total costs = ($50,000)

Net income = $125,000