Suppose the Lakers Did a Study That Showed That the Demand

question 24

Essay

Suppose the Lakers did a study that showed that the demand for tickets was perfectly inelastic at the capacity of building up to a price of $500 per ticket, at which point it becomes perfectly elastic. Draw a supply and demand diagram assuming a building capacity of 20,000. What would this imply about their best pricing strategy?

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Definitions:

Consumer Surplus

The difference between the total amount consumers are willing and able to pay for a good or service and the total amount they actually pay.

Willingness to Pay

The maximum amount an individual or entity is willing to pay for a good or service, reflecting its perceived value.

Marginal Utility

The additional satisfaction or benefit gained from consuming one more unit of a good or service.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, representing their gained benefit.