Microeconomic Principles Essay

926 Words4 Pages
Lesson Plan Outline Title: Elasticity of Demand Subject: Inelastic Ticket Pricing from La Trobe University Lesson "Inelastic Ticket Pricing" Description/Abstract (2-3 sentences): Many major sports teams tend to price their tickets in the inelastic region of the demand curve, but why is this so? This activity will help explain one of the likely reasons why sports teams do this, the idea of complementarities (a relationship where two factors can improve a specific outcome). Because of complementarities, sports teams are able to make a larger total revenue as they price their tickets in the inelastic region of the demand curve. Materials needed: Calculator White Boards (can be passed out first) Slips of Paper (6 labeled $60, 6 labeled $80, 6 labeled $100) Markers/Erasers (can be passed out first) Handouts of Demand Curve (below, used in step 5) Key Vocabulary: Demand Elasticity Elastic/Inelastic/Unit Elasticity Complementarities Total Revenue Opening/Lead In: Review consumer willingness to purchase. Review the concept of elasticity along the demand curve with the students and describe the change in price and quantity at each range. Specifically, how in the inelastic section of the demand curve quantity (of tickets in this scenario) demanded increases as price decreases, which means more people attend the game. Explain the concept of complementarities by describing the different areas consumers are likely to spend money on outside of buying tickets. Suggest to the students that due to complementarities, sports teams can generate a larger total revenue by placing their tickets prices in the inelastic region of the demand curve. Today, we are going to calculate the significance of complementarities and its effect on total revenue. Procedure (Steps to Deliver): Select two students to be the general managers of two
Open Document