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In the late spring and summer of 2015 Taylor Swift went on tour in part to promote her 1989 album. As economists we might want to think a bit about the cost structure of that tour. For a rock concert, the output in question is a seat at a concert. Swift's tour took place in indoor venues, large arenas like the MetLife Stadium in East Rutherford, New Jersey. These venues have a maximum capacity, so there is a fixed number of seats that could be produced at a maximum.
Question 1: What are the fixed costs of producing a concert in a venue? What about variable costs?
Question 2: If the Swift concert is not sold out by performance time, you should expect a last-minute ticket to be very cheap. Why is that so?
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