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10-09-2007, 02:58 PM
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Originally Posted by Crease View Post
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 bell-curve. Starting with zero seats and increasing, profits will rise will rise, then continue to rise at a rate of diminishing returns.
In Toronto, Montreal, even Vancouver, demand is highly or perfectly inelastic and not a curve.

Those cities could pack an arena of 30k seats easily. Even without elasticity, remember the definition of demand.

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