Supply and Demand Essays

1048 Words Dec 3rd, 2013 5 Pages
Economics Unit 2: How Markets Work Investigating Price Changes Portfolio Project
Part 1: Chapter 6 Wall Street Journal Questions
1) Why are sports teams considering switching to a variable–pricing strategy for tickets?
Sports teams are switching to a variable-pricing strategy for tickets so that they can get a higher profit on games with record attendance numbers. They feel the need to do so because the marginal costs, such as construction payment and players’ salaries, did not equal to the marginal revenue, since attendance was severely dropping. To pay for the marginal cost, the sports team needed to capitalize on things that they were sure of, like increasing attendances to games between major sporting rivals.
2) What would happen
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His demand is sensitive to price changes, so his demand would decrease as price increases. His demand is elastic for many reasons. It could be because he sees the tickets as a luxury rather than a necessity. The tickets do not help his life in any manner other than offering it entertainment.
4) For each article describe causes of changed price and the effects of the changed price. Increase in price: The recent deflation in Japan’s economy has brought paper used for commercial products and home offices to skyrocketing prices. In just the past five months, paper has totaled an increase of 25% of its original price value. Paper producing companies are setting high prices because the value of the yen has dropped and the import costs have risen. Since there are few substitutions for paper and many people need them for daily uses, the demand would be inelastic to the price increase. Companies could therefore produce more paper and gain a higher profit than before. Although demand would theoretically be higher, the economy would not improve much if the companies are not willing to raise their employee’s wages. Income plays a huge role in demand, for few people, if any, would buy products that they could not afford. In addition, as time passes, people would find or develop a substitute for paper, and the demand and quantity supplied would

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