"How Much For Tickets? You Need a Scorecard"
by John Morell

Source:  The New York Times, Sunday, June 8, 2003.
http://select.nytimes.com/search/restricted/article?res=FB091FFC34540C7B8CDDAF0894DB404482

             A baseball stadium has a relatively fixed supply of seats.  Traditionally, teams price tickets for the same seat at the same price, regardless of whether they are playing a big rival, a championship contender, or an obscure team that most fans don't care about.  This means that tickets sell out quickly for some games (and scalpers can illegally resell them for higher prices), while other games are played before a handful of fans.  These shortages and surpluses could be eliminated if prices were more flexible.  According to this article, some owners are applying supply and demand analysis and recognizing that they can adjust prices to reflect the anticipated demand for particular games. 

             Of course, other factors such as the day of the week and the weather also affect the demand for tickets for a particular game.  These are the factors that can shift a demand curve.  On a rainy day, the demand curve shifts to the left, as fewer people are willing to buy last-minute tickets than on a sunny day. 

• Try drawing two supply and demand graphs showing the difference in equilibrium price for popular versus unpopular games.  The supply of seats will be fixed and should be drawn as a vertical line.  The demand curve for popular games will be further to the right than the demand curve for unpopular games.  Graphically demonstrate the shortage and surplus of tickets if the current price for both types of games is set in-between the two equilibrium prices.
• The current system relies on something other than the price mechanism (and ability to pay) to decide who gets tickets for popular games.  How are these tickets allocated?  Does this system seem fair or unfair? 
• What do you think about a variable-price program for baseball tickets?  Would it be fairer than the current system? 
• Can you think of another product where demand varies but prices stay constant?  How might variable pricing impact the market for the good or service you came up with?

"When the Laws of Supply and Demand Don't Apply"
by Matthew L. Wald and Jennifer Lee

Source: The New York Times, August 10, 2003.
http://select.nytimes.com/search/restricted/article?res=F00A17FF39550C738DDDA10894DB404482

            The title of this article is misleading. The authors suggest that the laws of supply and demand do not hold in the market for natural gas. Does this mean that you should forget about learning microeconomics? Of course not! It just means that the headline writers did not read the chapter on elasticities of demand and supply.

            Wald and Lee inform us that customers who have gas furnaces cannot easily substitute to oil or some other fuel when the price of natural gas rises. The lack of substitutes means that the demand for natural gas is very inelastic. The supply is inelastic because environmental regulations have kept some sources of additional natural gas off limits. Even if those regulations were repealed, as some have proposed, the amount of domestic natural gas reserves is relatively small compared with domestic consumption. The U.S., according to the authors, consumes 25 percent of the worldwide demand but has only 3 percent of the remaining reserves.

            Just because consumers and suppliers do not show a lot of flexibility in response to price fluctuations does not mean that the laws of supply and demand do not apply. When both supply and demand are inelastic, small shifts of either curve will result in large price fluctuations (but little change in the quantity bought and sold). Try graphing a market where both curves are relatively vertical and see what happens. Your graph will mirror the description of the market for natural gas in the article.

• Draw the inelastic supply and inelastic demand for natural gas. Shift the demand curve in response to a cold winter. What happens to equilibrium price and quantity?
• Draw the inelastic supply and inelastic demand for natural gas. Shift the supply curve in response to technological improvements in transporting natural gas from overseas. What happens to equilibrium price and quantity?
• Given what you learned about the market for natural gas in this article, should the U.S. repeal environmental regulations and allow natural gas exploration on protected lands? Why or why not?