Why are flights getting more expensive and Broadway tickets getting cheaper? with knowledge of econ

The reason why the current price of air tickets is higher and the current price of Broadway tickets is lower is because of the existence of "**sensitivity".

In economic theory, sensitivity is expressed as the elasticity function of customer demand, that is, the change in the demand for a product due to a change. Due to the high degree of dynamics and uncertainty of the market, this quantitative data often cannot be directly used as the basis for formulating marketing strategies, and even sometimes mislead the business strategy of enterprises, and the study of consumers' consumption psychology and understanding the influencing factors of consumers' sensitivity can enable enterprises to grasp more initiative in marketing activities, and it is also of more practical significance. The higher price of airfares and the lower price of Broadway tickets are the decisions made by airline companies and the theater industry based on the "most sensitive" of the industry.

1) The "**sensitivity" of the current price of air tickets is low. In the airline industry, marketing executives have long recognized that business people are more likely than vacationers to change their travel plans short-before departure, and are less sensitive to fares. As a result, the airline's strategy is to charge the full price for last-minute passengers and discount for those who book in advance.

Because air tickets are calculated on a flight-by-flight basis, the number of seats on each flight is limited, and after the pre-sale of the price reduction**, each flight can basically be sold out. The few remaining seats, the airline must hope that the original price** can make a profit, even if it is not sold, the flight will not suffer.

2) The "**sensitivity" of the current price of Broadway tickets is high. The theatre industry faces a slightly different equilibrium of forces. While as in the airline industry, high-income earners are much more numb to ticket prices than low-income earners, high-income earners who watch theater are generally reluctant to buy tickets at the last minute.

When it comes to buying half-price tickets at the ticket office, the audience has to face two thresholds, one is the need to queue for a long time. Most high-income earners are reluctant to do this just to save a few bucks. The second is that only a few plays that are not particularly popular are sold at discounts.

The opportunity cost of time for high-income earners is high, and they finally make time for a night to watch dramas, and of course they only want to watch the plays they want to watch the most. For low-income audiences who are more sensitive to **, these two thresholds are relatively easy to cross. If they can't line up at the ticket window for half-price tickets, they probably won't go to a Broadway show at all.

The economic theory is that "people respond to incentives", so theaters can incentivize audiences at the last minute by taking advantage of the high "**sensitivity" to ensure more ticket revenue.

Economics also argues that a rational decision-maker will only take an action if its marginal benefit outweighs the marginal cost. While these two scenarios are very different, they both have the effect of filling more seats, reducing the average cost per customer and improving their own interests. Without these measures, not only will the company's earnings be reduced, but the average cost of corporate services will be higher.

The higher price of air tickets and the lower price of Broadway tickets are also the result of rational people making decisions considering marginal volume.

Tickets are pre-sold and bought in advance to be cheap, and there are not many seats at the current price, and it is inevitable to go. Airlines are also sure that the load factor is satisfied.

On Broadway, the current price is all the remaining empty seats, sell one to earn one.

Microeconomic problems, the elasticity of air tickets is related, but like train tickets are rigid, and if it rises in price, everyone will buy it, because there is nothing cheaper than trains. Air tickets ****, the demand will increase, and the total profit will increase, which is usually called "small profits but quick turnover".

The management economics teacher said that this is a microeconomics problem, but I am not impressed, the elasticity of the plane ticket is related, but like the train ticket is the first rigid, it will increase in price, everyone will buy it, because there is nothing cheaper than the train. Air tickets ****, the demand will increase, and the total profit will increase, which is usually called "small profits but quick turnover".

There is also a discount that must be higher than the average cost, the empty position is empty anyway, it is better to reduce the price, as long as the empty position ticket is sold, the average cost can be reduced. Why not.

Airline ticket discounts are an economically-discriminatory application. Charging two different ** for the same flight (with exactly the same service) is a discriminatory pricing method.

Discrimination** is possible because consumers are divided into different groups, and consumers in different groups have different elasticity of demand for the same goods or services. In terms of civil aviation services, consumers can be broadly divided into business travelers and private travelers.

Hehe, the landlord is not surprised, you are buying a ticket now because your reporter is leaving, it should be a little higher.

And you buy tickets for the game now, he Lasen is holding the idea that Feng Wang can make a little money, and besides, there is no one at the party, and the atmosphere is not good, if you don't go in, he has to go out to pull people.

Buying a plane ticket now means that it is urgent and is a rigid demand.

Why is it that the portraits on the coins are all side-portraits, but the portraits on the banknotes are positive?

Look at the change in your pocket, and you will find that the first ** head portrait that appears on the coin is a side portrait, Lincoln and Jefferson on the cent, and Roosevelt, Washington and Kennedy on the dime coin, all with sideways faces. But on the banknotes in the wallet, you can't find the profile picture. Washington on the $1 bill, Lincoln on the $5, Hamilton on the $10, Jackson on the $20, Grant on the $50, and Franklin on the 100-dollar bill are all portraits of the front.

With very few exceptions, the situation is similar in other countries: a profile image on a coin and a positive image on a banknote. Why is there such a difference?

To put it simply, although most painters preferred frontal portraits, the technical difficulties in metal engraving made it difficult to draw a recognizable positive portrait on a coin. The space available for painting on a coin is usually only 4 centimeters square, and it is difficult to draw a face-up portrait that can be easily identified due to the lack of detail. On the other hand, if you only draw a profile portrait, it is much easier to recognize the subject.

It is technically possible to draw a sufficiently detailed obverse portrait on a coin, but the cost is extremely substantial. At the same time, as the coins are in circulation, the delicate details quickly wear out.

If the profile image is easier to manufacture and identify, why is it discarded on banknotes? This is because the delicacy and intricacy of the portrait on the front prevents counterfeiting.

The last two examples in this chapter are intended to illustrate that sometimes we have to dig deep into history to explain the functionality of a product design.

The economics of discounted airline tickets.

Let's consider the aviation industry as a monopolist for the time being, because there is only one company operating on many routes. But there is a strange phenomenon, that is, we can often buy discounted air tickets, sometimes even a discount, lower than the corresponding train ticket **. If the airline is a monopolist and has the power to set prices, why should it sell tickets at a low price?

Airline discounts also depend on the object, for people who take first class, business class or temporary tickets on the plane, there is basically no discount. Most of the discounts are given to those who buy tickets in advance, non-business people, etc. Discounted air tickets mean that people who take the same plane pay differently, and this phenomenon is called "discrimination" in the scriptures.

Don't think that airlines are discounting for the benefit of passengers and that you are at a loss. Airlines don't have such a high level. It's discounted to make more money and make passengers pay more.

For example, without considering the airport construction fee, the full price of the air ticket from Beijing to Chengdu is 1,500 yuan. If you don't discriminate, that is, you don't get a discount, then you have a ticket according to the same ****.

According to what**, this ** will not be 1500 yuan, nor will it be only one or two folds. Let's assume that this single ** is 6% off, that is, 900 yuan.

At this time, those who are willing to take a plane to Chengdu are those who have an evaluation higher than or equal to 900 yuan for taking a plane, and those who have an evaluation of less than 900 yuan will not buy a ticket and choose other means of transportation.

If you think about it, those who have an evaluation of flying higher than 900 yuan would have been willing to pay higher, up to 1500 yuan, but now it only costs 900. These people get a consumer surplus, and the more consumer surplus, the less profit the airline will make.

Now let's see what happens after the discount, if the lowest price is three folds, that is, 450 yuan, the highest is the full price of 1500 yuan.

The result of the discount is as follows: 3% off if you book 10 days in advance; 4% off 8 days in advance; 5% off 6 days in advance, 6% off 4 days, 7% off 3 days, 2% off 2 days; 9% off for 1 day; There is no discount on the day.

As a result of the discount, first, the number of people who take the plane has increased compared to when the discount was not given, and the people who bought the 3, 4 and 5 discount did not intend to buy the ticket before, but now they do. Second, those who have an evaluation of taking a plane higher than 900 yuan, the original ** paid is 900 yuan, that is, 6% off, and now they can pay 7% off to the full price. Almost all of the consumer surplus disappears and becomes the profit of the airline.