Tuesday 23 September 2008

tuesday question

Why do theatres discount prices on spare tickets just before the performance whereas airlines and rail companies raise prices for last minute customers?

Ok, the answer seems to be simple.  
Demand for airlane tickets is inelastic, because if a person wants to go somewhere, he has no choice and buy the ticket even though it costs double price. 
So, airlanes and rail companies administration understands that the higher the price is, the more revenue they get and raise prices for last minute customers.
Now, what's about theatres? 
The demand for theatre tickets is usually elastic ( except for world famous musicals or if you are a theatre maniac ;) ).
That's why prices on tickets become very low just before the performance in order to sell all the tickets.