3. The Boston Symphony Orchestra (BSO) considers lowering ticket prices, anticipating that its revenues will increase....

3. The Boston Symphony Orchestra (BSO) considers lowering ticket prices, anticipating that its revenues will increase. At the same time, the Mass Transit Authority debates increasing fares, again anticipating that its revenues will increase. Can both be correct? Explain.

a. A study is conducted that finds that the demand elasticity for BSO tickets is equal to 1.7. Would you advise the BSO to go forward with its plan to lower prices? Explain.

b. Would you expect the cross-elasticity between the Boston Ballet and the BSO to more likely be equal to -.5 or +.5. Explain your answer.

c. Assuming that you are correct in your answer to b above, if the Boston Ballet decreased its price by 10%, what would be the change in the ticket sales for the BSO, all else equal

d. Is it more likely that the income elasticity for the BSO is equal to -2.0 or +2.0. Explain your answer.

Expert Solution

Rahul Sunny answered 1 year ago

The Los Angeles Galaxy soccer team is considering lowering ticket prices to increase sales. Their estimate...

The Los Angeles Galaxy soccer team is considering lowering ticket prices to increase sales. Their estimate demand curve is log(Q D) = 5.56 − 1.484 log(P). (a) What is the estimated elasticity of demand for LA Galaxy tickets? (b) Will the Galaxy lose revenue if they decrease ticket prices? Explain. (c) What assumption is made about demand when we use the above equation to represent consumers’ demand for LA Galaxy tickets?

If the Detroit Pistons raise their ticket prices and see ticket revenues fall (holding all else...

If the Detroit Pistons raise their ticket prices and see ticket revenues fall (holding all else equal), we can conclude that a. the supply of tickets is too high. b. the demand for tickets is too low. c. the demand for tickets is price inelastic. d. the demand for tickets is price elastic.

When the New York City Opera faced a growing deficit, it cut its ticket prices by...

When the New York City Opera faced a growing deficit, it cut its ticket prices by 20% hoping to attract more customers. At the same time, the New York Transit Authority raised subway fares to reduce its growing deficit. Are one of these two opposite approaches to reducing a deficit necessarily wrong? Explain fully.

when the new york city opera faced a growing deficit, it cut its ticket prices by...

when the new york city opera faced a growing deficit, it cut its ticket prices by 20% hoping to attract more customers. At the same time, The new york transit authority raised subway fares to reduce its growing deficit. Are one of these two opposite approaches to reducing a deficit necessarily wrong? explain?

Demand shocks do NOT include a(n): 1. increase in commodity prices. 2. tax increase. 3. reduction...

Demand shocks do NOT include a(n): 1. increase in commodity prices. 2. tax increase. 3. reduction in money supply. 4. increase in government expenditure.

How much will a $700,000 house cost in 15 years if house prices increase at 3%...

How much will a $700,000 house cost in 15 years if house prices increase at 3% per year? Your banker says that you'll need a 20% down payment for your first home purchase. How much will you need to save over the course of the next 15 years to have 20% down? If you are going to make monthly deposits into a savings account (earning 3% interest) how much will you need to save each month for the next 15...

Snooky Inc believes its biggest risk is that fuel prices increase and require it to raise...

Snooky Inc believes its biggest risk is that fuel prices increase and require it to raise its prices. Accordingly it decides to hedge this risk by purchasing a forward of 10M barrels of fuel. Let’s assume the price of the contract is $100/barrel. If the price of fuel increases to $105 by the end of the contract, how much will Snooky pay per barrel for it’s fuel? Show all work. How much total money would Snooky have saved or lost...

Last year the country of Barboo had its prices increase by 200%. You work for the...

Last year the country of Barboo had its prices increase by 200%. You work for the Barboo government as an economist and have been given the task to identify the sectors of Barboo’s population that are most adversely affected by this inflation. Which of the following group is probably the worst affected by inflation? 1) homeowners in Barboo with a 15 year fixed mortgage 2) retirees living on fixed pensions 3) workers with cost of living adjustment clause in their...

3. (12) Amazon had a public dispute with the book publisher Hachette regarding its prices for...

3. (12) Amazon had a public dispute with the book publisher Hachette regarding its prices for e-books. Amazon was trying convince Hachette to lower their price for e-books, arguing that doing so would benefit both consumers and the publisher; Hachette was refusing to cut their prices, countering that lower prices would hurt both the publisher and their authors. Amazon explained their objectives in terms of price elasticity on their discussion board which they recently discontinued. The full post was e-mailed...

Match the term to its definition. 1. Decrease in Supply 2. Increase in Quantity Supplied 3....

Match the term to its definition. 1. Decrease in Supply 2. Increase in Quantity Supplied 3. Increase in Demand 4. Decrease in Demand 5. Decrease in Quantity Supplied 6. Increase in Supply 7. Decrease in Quantity Demanded 8. Increase in Quantity Demanded Select A. Buyers want less because price increases. B. Sellers offer more because price increases. C. Sellers offer less because price decreases D. Buyers want more because price falls. E. Buyers want less at every price. F. Sellers...

Question