Economic theories that apply to raising the price on a good?
I am a college student writing a paper on economics. My essay needs to be 4,000 words long and deal with economic theory. I need to collect raw data and the topic should deal with a local issue.
I am thinking about writing my essay on whether the Detroit Red Wings should raise ticket prices however I'm having trouble as to what economic theories I would apply in this situation and what data I would collect. Elasticity would be one type of economic theory I could apply but what other theories could be applied to a topic such as this one?
If anyone has a better topic that would work in this situation, please let me know.
Answer:
Interesting thought.
You could try gathering some data...fairly easy to get...on what ticket brokers charge for Red Wings tickets. Then you could check to see if the franchise is forgoing revenue by underpricing the tickets. Throw in some supply-demand graphs that illustrate the low face values creating a shortage, show how ticket brokers gain economic surplus by being first in line when tickets go on sale...
I don't know if that stretches to 4,000 words, but it's something.
Best of luck with the assignment.
The Red Wings should raise ticket prices if they are selling out every game and if there are people who would be willing to pay more for tickets (for example, "scalping" activity). By pricing something below the equilibrium of supply-and-demand (which is when you sell every ticket and there is nobody unable to get a ticket who is willing to pay what the ticket costs), you throw profits down the drain (this is why minimum wage laws cause unemployment, for example or why gas price controls would cause a gas shortage).
If the Red Wings are not selling out every game, they should drop ticket prices so that they can sell out games.
Because economics is the study of human action, economic theories are universally applicable.
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I am thinking about writing my essay on whether the Detroit Red Wings should raise ticket prices however I'm having trouble as to what economic theories I would apply in this situation and what data I would collect. Elasticity would be one type of economic theory I could apply but what other theories could be applied to a topic such as this one?
If anyone has a better topic that would work in this situation, please let me know.
Answer:
Interesting thought.
You could try gathering some data...fairly easy to get...on what ticket brokers charge for Red Wings tickets. Then you could check to see if the franchise is forgoing revenue by underpricing the tickets. Throw in some supply-demand graphs that illustrate the low face values creating a shortage, show how ticket brokers gain economic surplus by being first in line when tickets go on sale...
I don't know if that stretches to 4,000 words, but it's something.
Best of luck with the assignment.
The Red Wings should raise ticket prices if they are selling out every game and if there are people who would be willing to pay more for tickets (for example, "scalping" activity). By pricing something below the equilibrium of supply-and-demand (which is when you sell every ticket and there is nobody unable to get a ticket who is willing to pay what the ticket costs), you throw profits down the drain (this is why minimum wage laws cause unemployment, for example or why gas price controls would cause a gas shortage).
If the Red Wings are not selling out every game, they should drop ticket prices so that they can sell out games.
Because economics is the study of human action, economic theories are universally applicable.
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