The Quantity Demanded of Tickets to the Super Bowl Is

question 72

Multiple Choice

The quantity demanded of tickets to the Super Bowl is always greater than the than the quantity supplied. Which of the following in the best explanation why the National Football League does not raise the price of tickets to the level where the quantity demanded equals the quantity supplied?

• A) Raising the price would reduce the demand for tickets; there would then be a surplus and the game would not sell out.
• B) The cost of raising the price and printing new tickets would exceed the revenue the NFL would receive from higher ticket prices.
• C) The demand for Super Bowl tickets is elastic; raising the price would reduce total revenue.
• D) The NFL is concerned that raising ticket prices would be considered unfair.

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Definitions:

Call Option

A financial contract giving the option buyer the right, but not the obligation, to buy a specified amount of an underlying asset at a set price within a specified time.

Historical Rate

An exchange rate used for converting transactions that have already occurred, based on the rate in effect at the time of the transaction.

Spot Rate

The current market price used for immediate delivery of a currency, commodity, or financial instrument.

Closing Rate

The exchange rate at the balance sheet date, used to convert the financial statements of a foreign subsidiary to the parent company's presentation currency.