How Can They Charge That? (And Other Questions)

May 11, 2013 | New York Times |

Why do tickets to popular Broadway shows command premium prices, while movie theaters charge the same price for popular films as for clunkers? Things in high demand generally command higher prices, so why not blockbuster films?

This question came from Peter Hlawitschka in an “Economic Naturalist” writing assignment for my economics course at Cornell’s Johnson Graduate School of Management. For years now, I’ve asked students like Mr. Hlawitschka to pose an interesting question based on something they have observed or experienced, and then employ basic economic principles in an attempt to answer it. Don’t try to submit a finished research study, I tell them. Just look around for something that seems puzzling and try to construct a plausible explanation suitable for future testing.