Why is it that people who have to fly at a moment's notice often pay some of the highest air fares whereas people who wait until the last minute to buy a ticket to a live performance of play may be able to get a better price than someone who bought
their ticket months in advance.
In both cases the firm is able to figure out the customer's ability and willingness to pay. A plane ticket that is purchased at a moment's notice is clearly sending a signal to the airline that this trip is essential – either an emergency or business related. Airline tickets purchased in advance involve planning and demonstrate that the customer is willing to be flexible about departure days and times. Someone who shows up for a live performance of a play at a moment's notice must not have had a very strong willingness to pay and will be put off by having to pay full price. The person who bought his theater ticket in advance probably didn't want to miss that particular show and didn't want to take his chances at buying it at the last minute only to discover that it is sold out.
You might also like to view...
The demand curve faced by a perfectly competitive firm
A. has unitary elasticity. B. is identical to the market demand curve. C. yields constant total revenues even when price changes. D. is the same as its marginal revenue curve.
If government raised taxes on the rich and this resulted in a decrease in productivity, the increase in taxes will still definitely make society better off
Indicate whether the statement is true or false
The more inelastic the supply curve in a goods market, the smaller will be the deadweight loss from a per-unit tax in that market.
Answer the following statement true (T) or false (F)
When investment funds are allocated by government rather than by markets,
a. profitable investments are more likely to take place. b. political influence replaces market return as the basis for allocating funds. c. funds will consistently be channeled into wealth-creating projects. d. projects that are political boondoggles will be unlikely to be undertaken.