Suppose the NFL wants to give the "common fan" the opportunity to attend the Super Bowl, so it sets Super Bowl prices "low"-let's say they set ticket prices for a regular seat at the Super Bowl to cost $400. People who have tickets, however, can turn around and sell them online for $1,500 or more. If there are no transaction costs for fans with tickets to sell them, the true cost to a fan of attending the Super Bowl is:

Question

Courtney Mcknight

Business

6 September, 17:59

Suppose the NFL wants to give the "common fan" the opportunity to attend the Super Bowl, so it sets Super Bowl prices "low"-let's say they set ticket prices for a regular seat at the Super Bowl to cost $400. People who have tickets, however, can turn around and sell them online for $1,500 or more. If there are no transaction costs for fans with tickets to sell them, the true cost to a fan of attending the Super Bowl is:

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Riley Davila · Answer 1

The true cost is $1,500. If there are no transactional costs and exists a steady demand for tickets with a price of $1,500, it means that the total seats available are less than the demand for it. Therefore, by the market mechanism, the equilibrium price of the ticket will be higher than $400.

Explanation:

Since there is a fixed number of seats and a bigger number of fans with the desire and capacity of buying a ticket, and the accessibility to prices of $400 is not related to level of favourability in buyers, all the those who are not really fans of NFL but got the chance to got a ticket in $400 will sell the ticket, because he or she will find another fan with the interest of buying the ticket at that price. This mechanism will repeat until the last ticket is sold, and the average price paid will be $1,500.