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LilyGal LilyGal
wrote...
Posts: 350
A week ago

Question 1.

All of the following products are likely to have significant network externalities except



Twitter.



cell phones.



cat food.



popular board games.



Question 2.

Music writer Anthony Kuzminski praised rock star Tom Petty in a 2007 article in the online Unrated Magazine. Kuzminski wrote: "Something Petty never can get enough credit for is his fan-friendly attitude. He kept ticket prices for [his concerts] at $50 when other acts this summer are charging upwards of $100 for stadium gigs. Petty could charge more, but he doesn't see the point. He has stated time and time again he still makes millions when he's on the road, regardless of his ticket prices. He is the last of the fan friendly rock stars out there." Use economic reasoning to write a rationale for Tom Petty's decision to charge prices for his band's ("Tom Petty and the Heartbreakers") concerts that are less than market clearing prices.

Source: Anthony Kuzminski, "Tom Petty & The Heartbreakers at the Vic Theater" http://www.unratedmagazine.com/

Textbook 

InMicro


Edition: 1st
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MikaelDevostMikaelDevost
wrote...
Posts: 336
A week ago
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Answer 1

cat food.



Answer 2

Tickets to Tom Petty's concerts consistently sell at prices lower than tickets to concerts by other well-known rock bands. This means that he and the Heartbreakers earn lower profits in the short run but his actions ensure the loyalty of concert goers, and profits, in the long run.

1

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