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Using a supply and demand diagram, assess two reasons why live entertainment business revenues in the UK might have increased in 2017 - Edexcel - A-Level Business - Question 1 - 2022 - Paper 3
Question 1
Using a supply and demand diagram, assess two reasons why live entertainment business revenues in the UK might have increased in 2017. (8)
Worked Solution & Example Answer:Using a supply and demand diagram, assess two reasons why live entertainment business revenues in the UK might have increased in 2017 - Edexcel - A-Level Business - Question 1 - 2022 - Paper 3
Step 1
Reason 1: Increase in Festivals and Better Weather
Answer
The number of festivals in 2017 increased, which likely attracted more attendees. An improvement in weather during the festival season could have led to higher ticket sales. This scenario indicates a rightward shift in the demand curve, as more consumers are willing to attend events. According to the diagram, this shift moves the equilibrium from D1 to D2, leading to increased prices (P1 to P2) and greater quantities sold (Q1 to Q2).
Step 2
Reason 2: Release of New Shows and Performances
Answer
The introduction of popular shows, like Hamilton, has also significantly contributed to revenue growth. Such high-demand performances create inelastic demand; even if prices rise, audiences remain willing to spend for tickets. This scenario further shifts the demand curve to the right, emphasizing consumers' preferences for popular events. Again, referencing the diagram, this indicates increasing ticket prices and higher revenue.