In England, football stadiums are generally constructed and funded by the private sector, whereas in some countries the government constructs and funds the stadiums. Many football stadiums in the English Premier League are sold out on match days. In the short run, the supply of seats is perfectly inelastic. Football clubs could even increase prices, continue to sell their tickets and therefore increase their profits. Premier League footballers at present earn very high wages.
(a)[2]
State what is meant by perfectly inelastic supply.
(b)[4]
Explain two reasons why a firm might not seek maximum profit.
(c)[6]
Analyse why Premier League footballers are paid very high wages.
(d)[8]
Discuss whether a government should use some of its tax revenue to build sports stadiums or not.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “A price change brings about no change in supply” …