S. Klepper, Economics 73-100, Fall 2009
The
New York Jets football team has been very popular. It has sold out every game for the past 10
years, and there has been a waiting list of people willing to buy tickets. In 2010 the team will move into a new stadium
with a much larger seating capacity than the current stadium the Jets play
in. Assume that if ticket prices were
the same at the new stadium as the old one, then everyone who attended games at
the old stadium would continue to attend games at the new stadium and some of
the people on the waiting list would also purchase tickets to games at the new
stadium.
Which
of the following statements concerning this situation are correct? Mark true for a correct answer and false for
an incorrect one and provide explanations for each of your answers.
_____1. If the Jets moved into the new stadium and did not increase their ticket prices, they would continue to sell out every game.
_____2. If the Jets moved into the new stadium and did not increase their ticket prices, their total revenues from the sale of tickets would be greater than at the old stadium.
_____3. If the Jets moved into the new stadium and increased their ticket prices, their total revenues from the sale of tickets would be greater than at the old stadium.
_____4. If the Jets moved into the new stadium and increased their ticket prices and the income elasticity of demand for football tickets is less than one, then the total expenditures by buyers on Jets tickets would be greater than at the old stadium.
_____5. If the Jets moved into the new stadium and decreased their ticket prices and the price elasticity of demand for football tickets is greater than one, then the Jets’ revenues from the sale of tickets would be greater than at the old stadium.