Elasticity and Total Revenue

Earlier this year, Garth Brooks came to the Calgary Stampede to perform and we saw a huge demand for tickets. Tickets went on sale for $62 each and sold out in just 58 seconds leaving many fans, including myself, disappointed and ticketless. There were still tickets available for purchase but many consumers felt the price was too high and decided to forgo the concert. After the initial sell-out, the demand for the remaining limited tickets reached an inelastic point. A few consumers were still willing to buy, but most did not want to pay the prices being asked.
 

When the demand for tickets was at it it’s highest, the demand was inelastic meaning if the price were to change, the response would be minimal. The drop from 100,000 to 90,000 would only make up 10% of the total quantity demanded. As long as the tickets were reasonably priced, most people were still willing to buy. We know this is the case since the demand for tickets when they first went on sale at $62 was huge.

When the demand for tickets reached its lowest point, the demand was elastic meaning if the price were to change, the response would be significant. The drop from 10,000 to 0 wiped out all demand for the product so there is a 100% change. At the highest price, there were little to no consumers who were willing to buy tickets.

The graphs below depict the change elastic demand to inelastic as well as the unitary price.

 

Schneider, Katie, Garth Brooks: Gone in 58 Seconds,
http://www.calgarysun.com/2012/04/14/garth-brooks-gone-in-58-seconds
site accessed on October 3, 2012