One aspect of costs in the performing arts that is different from other forms of production is that is difficult to measure the output. Economists have generally adopted the seat utilization method of measuring output in the performing arts. Another aspect of costs in the performing arts that is unique is the average variable costs are equal to the marginal costs, both of which remain constant. The price of production does not increase with the sale of one more ticket, nor do the variable costs rise with the additional sales of tickets. A for-profit organization wishes to maximize profits by maximizing the difference between total revenues and total costs.
Pricing is set to maximize profits.
Quality and quantity factors are important to a for-profit firm but so is economic efficiency. It is necessary for this type of firm to maximize profits by setting output where marginal revenue equals marginal cost. The quality goal may be a wish to excel according to it's own internal standards of excellence. The quantity goal may be to attract the largest possible audience for its performances. Spending on quality and quantity will diminish the marginal returns as costs for production are increased.