Consider the following situations and explain your reasoning. a. Congratulations
ID: 1137333 • Letter: C
Question
Consider the following situations and explain your reasoning.
a. Congratulations! You have just become the sole owner of a NFL (National Football League) franchise. Assuming that your goal is to maximize revenues, do you necessarily want to sell out the stadium on game days? Explain.
b. You have just become a powerful, forceful, yet benevolent union leader. Assuming you have the clout to do so, do you want to raise wages to the highest level you possibly can? As the representative of many workers, and particularly concerned with their best interest, what might be your goal in this regard? Explain.
Explanation / Answer
a) The revenue maximising monopolist produces that level of output where MR(Marginal revenue) = 0. Here, the supply is inelastic and also demand is expected to be higher. It is not necessary for monopoly player to sell all tickets, different prices can be charged for different customers by indicating limited supply and higher demand. This way a comapny can generate more profit.
but for more revenue firm can sell all tickets at lesser price than profit strategy.
b) A good union leader will not take negotiations at such level which will break the back of employers and ultimately result into employee becoming jonbless. It is surely his/her job to make sure that workers get better facilities, fringe benefits, working conditions, better insurance and other facilities. A good union leader will also ensure that better training sessions or workshops are conducted so that employees can progress in their career. Only wages/salaries should not be the aim. It is true that higher wages motivate people a lot and if possible negotiation should happen for salary also but not at highest possible levels but highest never has a limit as salary is a very sensitive issue and larger welfare should be achieved.