This article explains that the ticket price for a Canadian basketball team, the Raptors, have increased by 2.5% (about $2 extra per game), due to the increasing demand for these tickets. This article relates to the concept of demand and how increasing the price will result in a decrease in the quantity of tickets bought. This commentary will cover the law of demand, elasticity as well as the consumer and producer surplus associated with the sale of these tickets.
The law of demand states that the price and quantity demanded of a product is inversely related, so as the price increases, the quantity demanded will decrease. A shift in the graph is a decrease or increase in the quantity demanded of a product at every price. Elasticity measures the
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The consumer surplus that they had has become smaller, from WPeY, to WP1X. This in turn reflects in an increase in the producer surplus from PeYZ to P1SZ.
A stakeholder of this price change in the tickets would be the National Basketball Association who is responsible for hosting and organizing these games since ultimately, they are the ones who are gaining the revenue. Their revenue depends on the price of the tickets and the quantity of tickets that they sell. The players are also a stakeholder as they are paid depending on how well their team’s tickets sell. If greater money is generated from the sale of the tickets, they will gain a higher pay, and vice versa.
In the short run, the price change would lure in a slightly smaller quantity of consumers as it is natural for people to initially buy less of a product whose price has increased. However in the long run, the quantity demanded of the tickets will return back to normal since there are no other substitutes for this basketball team, and so a lot of the fans would have no choice but to only attend the events hosted by this