On Sunday, August 19, the Detroit Tigers and the New York Yankees played baseball at Yankee Stadium. Both teams were in pursuit of league championships. Tickets to the game were sold out, and many more fans would have attended if additional tickets had been available. On that same day, the Cleveland Indians and the Tampa Bay Rays played leach other and sold tickets to only 22,500 people in Tampa. The Rays stadium, Tropicana Field, holds 43,772. Yankee Stadium holds 57,478. Assume for simplicity that tickets to all regular-season games are priced at $40.
(a) Draw supply and demand curves for the tickets to each of the two games. (Hint: Supply is fixed. It does not change with price.) Draw one graph for each game.
(b) Is there a pricing policy that would have filled the ballpark for the Tampa game? If the Rays adopted such a strategy, would it bring in more or less revenue? Explain.
(c) The price system was not allowed to work to ration the New York tickets when they were initially sold to public. How do you know? How do you suppose the tickets were rationed?