Photo AI
Patrick Street Productions produces musicals - Edexcel - A-Level Economics A - Question 4 - 2021 - Paper 1
Question 4
Patrick Street Productions produces musicals. Its latest production is ‘It’s a Wonderful Life’ and the total cost of this production is $200,000. The ticket price is... show full transcript
Worked Solution & Example Answer:Patrick Street Productions produces musicals - Edexcel - A-Level Economics A - Question 4 - 2021 - Paper 1
Step 1
Calculate the total revenue from ticket sales for ‘It’s a Wonderful Life’
Answer
To calculate the total revenue from ticket sales, we use the following formula:
Total Revenue = Ticket Price × Number of Seats × Number of Shows
Given that:
- Ticket Price = $40
- Number of Seats = 300
- Number of Shows = 5
We can now compute:
Total Revenue = 60,000
Step 2
Calculate the value of the government subsidy
Answer
To find the government subsidy necessary to cover all costs, we first determine the percentage of revenue covered by ticket sales and charitable donations:
- Revenue from ticket sales = 30% of total costs = 0.30 × 60,000
- Charitable donations = 12.5% of total costs = 0.125 × 25,000
This leads us to the total covered by ticket sales and donations:
- Total Covered = 25,000 (from donations) = $85,000
Now, to cover the total production cost:
- Government Subsidy = Total Cost - Total Covered = 85,000 = $115,000