Originally Posted by Crease
Actually, as the supply curve shifts to the right and assuming demand doesn't change at all, the equilibrium point drops. At some point, adding too many seats will create a surplus and force overall prices down just to break even.
Regardless, the profit matrix is a bellcurve. Starting with zero seats and increasing, profits will rise will rise, then continue to rise at a rate of diminishing returns. Eventually those returns are negative and costs will outweigh revenues.
I can guarantee every arena built has gone through a profit matrix to determine the number of seats that will maximize profits.
