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How is Supply and Demand Related in NBA

how are supply and demand related

There are actually several supply and demand connections to NBA.

An Average NBA player makes an annual salary of 5 million US dollars. The reason that these basketball players make so much money can be easily understood by the supply and demand graph. We will equate the number of very talented and most experienced basketball players as the supply. Of course, this supply is very limited because it takes years of training and playing with the support and admiration from fans to become a most valuable player. And the amount of people who are wiling to pay high-ticket prices to watch these players exhibit their adroit skills is very high. Since the supply quantity of MVPs are low and demand to see them is very high, the price then will be, indeed, very high according to the supply and demand curve.

Same idea can be applied to the limited number of Play-Off games. There is a

high demand to attend a Play-Off game to see the championship teams play. But the amount of seats in the stadium is, unfortunately, limited. Thus the supply and demand curve tells us the price is going to high. The average price of a Play-Off game ranges from $110 to $300. If the demand for these games lessens, then the prices will be not as expensive, but then who would not like to see Andrew Bynum dunk over opponents’ heads and see Kobe make the most amazing lay-ups.

Aside from the revenue of the ticket purchases, NBA so makes dough from the viewers at home. A great percentage of the total revenue comes form the TV ads watched and the NBA teams merchandise purchased.  Thus with the understanding of supply and demand curve, non-price competition (TV ads, although NBA is a monopoly), and the business from merchandise, NBA is able to continue to be a multi-billion dollars.

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