Question 19M.3.HL.TZ0.1k.ii
| Date | May 2019 | Marks available | [Maximum mark: 3] | Reference code | 19M.3.HL.TZ0.1k.ii |
| Level | HL | Paper | 3 | Time zone | TZ0 |
| Command term | Calculate | Question number | k.ii | Adapted from | N/A |
A music concert is to take place in Country Z. 40 000 tickets are available for the concert. Figure 3 shows the demand (D) for tickets at this concert.
Figure 3
The fixed costs for the concert have been calculated as $3 million, while it is expected that there will be no variable costs.
Assuming the event organizers aim to maximize profit, calculate the profit that will be made from the concert.
[3]
Award [1] if the candidate identifies that profit will be maximized where:
MC = MR
OR
MC = 0
OR
TR − TC is maximized
ie at 30 000 tickets and a price of $150.
TR = 30 000 × $150 = $4.5 million
TC = $3 million
Profit = 4.5 million − 3 million
Any valid working is sufficient for [1].
= $1.5 million
An answer of $1.5 million or 1.5 million or 1 500 000 without any working is sufficient for [1].
OFR applies, provided either TR or TC is calculated correctly.
Higher achieving responses recognised that MC = 0, and so to meet the profit-maximizing condition MR must also be zero (i.e. at the revenue-maximizing level of output). Lower achieving responses appeared to assume that revenue maximization is equivalent to profit maximization and calculated accordingly.
