Part of the patron's utility comes from having a guaranteed seat. Then placing the remaining tickets up for sale for at lower price available on a first come first served basis. Using this method, Broadway Theater for instance gained revenues previously lost to scalpers in the form of ice. Unsold tickets at the high price are sold at an outlet in Times Square and two other locations in New York city at lower prices to boost reve nues. Write some notes on price elasticity, income elasticity and cross price elasticity.
Price elasticity is the measure of how demand stretches with regard to a price change.
It is the percentage change in the quantity demanded due to a percentage change in price. Understanding price elasticity will help to maximize profits. If as price goes down for a good or service, total revenues go up than it has an elastic demand. If price goes down and TRs remain unchanged then it has unitary elasticity of demand. Necessity type products as well as addictive goods tend to have inelastic demand where as luxury type products tend to be elastic.