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At Fenway Park, home of the Boston Red Sox, seat-ing is
Chapter , Problem 9(choose chapter or problem)
At Fenway Park, home of the Boston Red Sox, seating is limited to 39,000. Hence, the number of tickets issued is fixed at that figure. Seeing a golden opportunity to raise revenue, the City of Boston levies a per ticket tax of $5 to be paid by the ticket buyer. Boston sports fans, a famously civic-minded lot, dutifully send in the $5 per ticket. Draw a well-labeled graph showing the impact of the tax. On whom does the tax burden fall—the team’s owners, the fans, or both? Why?
Questions & Answers
QUESTION:
At Fenway Park, home of the Boston Red Sox, seating is limited to 39,000. Hence, the number of tickets issued is fixed at that figure. Seeing a golden opportunity to raise revenue, the City of Boston levies a per ticket tax of $5 to be paid by the ticket buyer. Boston sports fans, a famously civic-minded lot, dutifully send in the $5 per ticket. Draw a well-labeled graph showing the impact of the tax. On whom does the tax burden fall—the team’s owners, the fans, or both? Why?
ANSWER:Step 1 of 2
The supply for any product, when fixed, has a vertical supply curve. It says that whatever be the price, the supply cannot increase, i.e., the supply is perfectly inelastic. The scare product has a limited supply. The party having inelastic demand or supply has to bear the higher tax burden.