Discussion Question: Discuss how and why teams make short run decisions on ticke

Question

Discussion Question: Discuss how and why teams make short run decisions on ticket pricing and decisions. Speak to this from an economist’s perspective. Provide an example that is not offered in the reading resources. Integrate reference to support your discussion. Discussion Question: Discuss how and why teams make short run decisions on ticket pricing and decisions. Speak to this from an economist’s perspective. Provide an example that is not offered in the reading resources. Integrate reference to support your discussion.

Explanation / Answer

The relationship between ticket pricing and attendance level at the team levels that franchise owners must have in order to maximize returns for their investment. The amount of tickets demanded by the fans depends on the price of the tickets and other factors such as team performance, fan income, and location of the team's stadium. The franchise owners set the price according to the unit elastic point of the demand curve. Inelastic demand leads to higher revenues for the franchise which is established by the long run decision making. However, short-term decisions are important as the fixed cost which is sunk cost in the short run cannot be done away with by ceasing production temporarily hence the firm's short-run supply curve is the portion of the marginal cost curve that lies above average variable cost. For example, Airlines would continue to sell tickets despite incurring losses because it can cover its variable cost irrespective of sunk costs involved with the production.

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