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.

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Rahul Sunny answered 1 year ago

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